The performance numbers published by the mutual fund in the factsheet look very different from the returns he sees online

Avoid daily tracking of mutual fund performance He is worried about his investments not performing well, but is not sure what he should be doing

Niren Sharma has invested in mutual funds and wants to see his investments make money. He goes through the NAVs that are published daily, besides checking several financial websites. He gets very anxious every time he sees a fall in the NAV. The performance numbers published by the mutual fund in the factsheet look very different from the returns he sees online. He is worried about his investments not performing well, but is not sure what he should be doing.

Niren Sharma needs to understand that scheme performance should be matched with the recommended time horizons. Liquid fund returns are measured over shorter periods and are annualised for comparison across products or time periods. Tracking equity fund NAVs too frequently or trying to annualise returns can lead to bizarre results.

To avoid disappointment due to shortterm volatility, these must be evaluated over longer time horizons of at least three years. Tracking returns daily assumes these will always rise, which isn’t realistic. The returns provided in a mutual fund’s factsheet are based on Sebi guidelines, reflecting point-to-point returns over standardised periods, typically one or three years. These figures may not coincide with Sharma’s holding period.

These are standard returns for standard time periods, assuming that an investor came in at the starting point and got out at the end point. Sharma may have invested not only at different starting points, but could also have added to his investments in the interim. Therefore, his returns would be different depending on how much he invested, and when.

Hence, Sharma should understand that evaluating a fund and his own investments are completely different exercises. If the objective is to see whether he should stay invested, he should focus on judging the fund, not how his investment has been performing. He must compare its performance with similar funds in its category at regular intervals using the standard published data. If its performance remains below category average or benchmark index consistently, while most of its peers are doing well, it might be a strong reason for Sharma to consider switching his holdings. If his fund is doing fine, he will benefit from staying invested.

Marketing
Digital Marketing Masterclass by Pam Moore
By - Pam Moore, Digital Transformation and Social Media Expert
Legal
Mastering M&A Deal Making
By - Ashwath Rau, Senior Partner- AZB & Partners
HR
Human Potential and the Future of Employment
By - Lynda Gratton, Prof. at London Business School, Speaker, Author, Global Thought Leader
Data Science
SQL for Data Science along with Data Analytics and Data Visualization
By - Metla Sudha Sekhar, IT Specialist and Developer
Marketing
Future of Marketing & Branding Masterclass
By - Dr. David Aaker, Professor Emeritus at the Haas School of Business, UC Berkeley, Author | Speaker | Thought Leader | Branding Consultant
Office Productivity
Mastering Microsoft Office: Word, Excel, PowerPoint, and 365
By - Metla Sudha Sekhar, IT Specialist and Developer
Marketing
Modern Marketing Masterclass by Seth Godin
By - Seth Godin, Former dot com Business Executive and Best Selling Author
Finance
A2Z Of Money
By - elearnmarkets, Financial Education by StockEdge
Artificial Intelligence(AI)
Basics of Generative AI : Unveiling Tomorrow's Innovations
By - Metla Sudha Sekhar, IT Specialist and Developer
Finance
A2Z Of Finance: Finance Beginner Course
By - elearnmarkets, Financial Education by StockEdge
Finance
Corporate Fraud and Forensic Modelling
By - Ankush Lamba, Managing Director- Ankura
Legal
Commercial Contract and Dispute Resolution
By - Mukul Sharma, Partner- Cyril Amarchand Mangaldas
Web Development
Mastering Full Stack Development: From Frontend to Backend Excellence
By - Metla Sudha Sekhar, IT Specialist and Developer
Office Productivity
Advanced Excel Course - Financial Calculations & Excel Made Easy
By - Anirudh Saraf, Founder- Saraf A & Associates, Chartered Accountant
Finance
AI and Generative AI for Finance
By - Hariom Tatsat, Vice President- Quantitative Analytics at Barclays
Office Productivity
Zero to Hero in Microsoft Excel: Complete Excel guide 2024
By - Metla Sudha Sekhar, IT Specialist and Developer
Legal
Data Privacy with General Data Protection Regulation (GDPR)
By - Arun S. Prabhu, Partner (Head- Technology and Telecommunications): Cyril Amarchand Mangaldas
Legal
Drafting Commercial Contracts and Dispute Resolution
By - Shafaq Uraizee Sapre, Managing Partner: Mumbai, Chandhiok and Mahajan
Legal
Labour Laws
By - Ankita Ray, Partner: Cyril Amarchand Mangaldas
Finance
Budget Analysis, Forecasting & Control
By - Mandar V. Joshi, Partner and Head of Technology Implementation, Management Consulting: KPMG

Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

This story originally appeared on: India Times - Author:Faqs of Insurances