How To Analyse Mutual Funds | Business News

Last Updated:July 12, 2025, 16:20 IST

Mutual fund analysis is a critical part of financial strategy and investment planning, helping align the fund’s benefits and risk with your goals.

How can you do the mutual fund analysis before investing?
(Representative Image)

Evaluating a fund’s past performance, risk profile and investment strategy falls under Mutual Fund analysis, done to ascertain if your mutual fund aligns with your financial goals and risk tolerance. Undertaking proper mutual fund research and analysis is considered a critical exercise in your financial planning and investment journey.

While individuals are free to decide when and how much they wish to invest in mutual funds, the Securities and Exchange Board of India (SEBI) suggests that investors should opt for the right mutual funds using correct data analysis. Mutual funds come in different forms for investors to purchase. Those willing to plunge into risks can opt for equity funds, whereas those who like playing safe on their sum assured tend to opt for debt funds. Either way, a smart strategy and overall analysis could prove beneficial in the long run.

What To Analyse

Performance: Ask a simple question, what has been the performance of a particular Mutual Fund and then compare its previous benchmarks with other funds available in the financial market? Are the returns are consistent or do they fluctuate should determine whether you should go ahead and invest in a particular fund.

Risk: The risk element should not be too high. Whether the fund invests in risky assets such as small-cap stocks or focuses on safer options like bonds is important to determine.

Investment Strategy: It is important to verify a mutual fund’s investment strategy, including the assets the fund holds and whether it follows a growth, value, or income-focused approach.

Before undergoing the mutual funds analysis, however, it is equally important to be fully certain of your investment objectives. The goal could be as low as covering vacation expenses and as high as buying a house or making retirement plans. A mutual fund investment strategy can vary depending on the different financial goals, be it the short-term or long-term.

Individuals are advised to define their investment goals and what exactly they are saving for. Different mutual funds come with different benefits, risks and returns. At the same time, each goal of yours has a different timeline and requires a certain amount of investment. Aligning the two while assessing your risk tolerance is crucial.

Business Desk

A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More

A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More

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