From the Executive Editor

When choosing to invest in mutual funds, there are basic investment norms relating to the sector that you should be aware of to maximise your gains.
Sarbajeet K Sen/Money Today        Print Edition: June 2014

The Indian electorate has delivered a historic mandate in favour of a Narendra Modi-led government at the centre. By the time this issue hits the stands, the process of constituting the new government would have been set in motion with Modi likely to be sworn in as Prime Minister on May 26.

The whiff of a strong government under a decisive leader has ushered fresh hopes for growth and development by bringing an end to the extended policy paralysis that had afflicted the outgoing regime. The changing mood can be felt by developments in the stock market. The benchmark indices scaled new highs as counting day, May 16, approached. And as results trickled in indicating a clear majority for the National Democratic Alliance, the BSE Sensex spurted over 1,400 points intra-day to breach 25,000 for the first time and touched a record high of 25,375.

The consensus view is that this may be the beginning of an extended bull run in equities. These could be good times to dabble a bit in the equity market. But what if you are not adept at investing in the stock market? If you do not know the rules of the game and the way it is played, equity investment is fraught with high risk. It is then best to leave it to experts to manage your money to help you ride the likely bull run. We have always held that the best way for those with lack of knowledge or expertise in the markets is to adopt the mutual fund route.

The mutual fund industry is among the best regulated sectors of the financial landscape and handles your money at negligible cost. However, even when you choose to adopt this route, there are basic investment norms relating to the sector that you should be aware of to maximise your gains.

Among these, you should know how a systematic investment plan weighs against investing a lump-sum amount. You should also know how to approach sectoral funds and thematic funds and how risky are these. Should you invest in new fund offers or go for established funds that have track records? We tell you how to tackle all these issues, and some more, in our cover story starting on page 20. The investing tips may come in handy. Though your mutual fund investments are likely to witness less volatility, there are market risks associated with them. Little wonder the variation among fund performances. For example, the two best performing openended equity diversified funds, UTI Transportation & Logistics Fund and Reliance Small Cap Fund, have delivered returns of 60.95% and 43.17%, respectively, for the year ended 31 March 2014, while the worst performing funds, Sundaram Select Thematic Funds - PSU Opp and Baroda Pioneer PSU Equity Fund, delivered returns of -0.35% and 1.35%, respectively.

In our annual mutual funds special issue, we also bring to you the best performing funds at the end of 31 March 2014. A glance through the comprehensive data on fund performance should give you a good idea on where to place your bets.

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