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How to Identify the Best Performing Mutual Funds for Your Investment Goals

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May 8, 2023


What’s Inside

With thousands of mutual funds in the market, choosing the best one is daunting. Besides, each fund has pros and cons. Hence, the first step is to define your aim and invest.

Are you investing for retirement, buying a house, funding education, or any other goal? Once you have the objectives laid out, identifying the one that fits your needs gets less overwhelming. Read on to learn how to find the best funds for growth and when matrices can help compare mutual fund performance before investing in the right one.

Finding the Best-Performing Mutual Funds India

A mutual fund is one of the most popular routes to park your money and earn returns. But many factors come into play when finding the best-performing mutual funds in India. Here are all the things you should consider to measure mutual fund performance and pick what’s best.

1. Check Historical Performance

Every mutual fund manual has a disclaimer conveying that past performance is not a future performance indicator. Yet, past data can help you check how the fund has performed earlier. Here one should aim for consistent long-term performance rather than short-term gains. Consistency also highlights the skill level of the fund manager.

2. Analyse Risk-Adjusted Returns

Every fund expects some risks related to the market. Consider looking at the risk-adjusted returns to assess how well a mutual fund performs compared to the risk taken. It includes evaluating metrics like the Sharpe ratio to measure risk-adjusted returns and the standard deviation for volatility. Funds with higher risk-adjusted returns show better returns for the investor.

3. Assess Fund Manager Expertise

Every fund has a manager to gauge the performance and supervise it. Looking at the fund manager’s track record is crucial for picking the best-performing mutual funds.

Hence, check the experience and expertise of the fund manager. A skilled and experienced manager may have a track record of delivering consistent returns. Research the manager's investment strategy, tenure, and past performance records to understand the credibility.

4. Inspect the Expense Ratios

Mutual funds management firms charge expenses in the form of an expense ratio. Lower expense ratios mean you have more money for your investments to grow. Compare expense ratios among similar funds to uncover the most cost-effective options.


Seeking funds with stable management teams and consistent investment strategies is an excellent place to start. Use the above indicators to choose the best-performing mutual funds.

You can use different tools like Fi Money to compare mutual fund performance. Further, mutual fund investments on Fi are commission-free. With its intuitive user interface, suited for novice and seasoned investors, you can select from over 800 direct Mutual Funds and compare their performance.

Frequently Asked Questions

1. What are the key performance indicators (KPIs) should investors look for when evaluating mutual funds?

Investors can look at the four primary investment risk indicators for analysing their portfolios of mutual funds. These KPIs are alpha, beta, the Sharpe ratio and standard deviation. There are many other indicators, but these four statistical measurements predict the risk or volatility of the investment.

2. What historical performance metrics should investors consider when analysing mutual funds?

Multiple metrics help you analyse mutual funds. The most used mutual fund performance metrics are annualised return, standard deviation, Sharpe ratio, alpha, beta, rolling returns and portfolio turnover.

3. What are the current market trends and economic conditions that can impact mutual fund performance, and how can investors stay informed about these factors?

Many current market trends and economic conditions can impact mutual fund performance. Any economic changes occurring in sectors or industries, policy changes made by the government in the financial budget and otherwise can influence the market.

While predicting their effect is tough, investors should keep themselves updated on these changes. Tracking reputable financial news outlets can provide updates on market trends, economic conditions, and other relevant news impacting mutual fund performance.

4. How can investors evaluate the fees and expenses associated with mutual funds, and how do these costs impact overall returns?

Exit load, entry load, transaction charges and expense ratio are some of the fees involved in the mutual fund investment. AMC charges a well-earned fee in the form of these expenses.

Different costs impact the returns. You can check a fund’s objectives and past performance to determine if these charges are reasonable and suit your pocket.


Investment and securities are subject to market risks. Please read all the related documents carefully before investing. The contents of this article are for informational purposes only, and not to be taken as a recommendation to buy or sell securities, mutual funds, or any other financial products.
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