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Previous performance of the Fund House
Knowing about the previous performance of a Fund is a good way to know more about it. However, generally we see lots of lists etc. showing best performing funds those are mostly monthly results or quarterly results. One should never rely on short term results as they not fool proof way to rate any fund. On such quarterly and monthly basis various funds acclaims their name in top fund list, as already rather than looking for such result, look for long term results.
The best way to know a fund is look for its previous performance in long term, long terms should be considered as 3 to 5 years. So, in long term those funds who are consistently performing well are the one one should consider to look into. Long term performance analysis not only help us to find which fund have more chances to perform in future, it also helps us to get to know about the efficiency and management capability of the fund managing house.
Hence, always pick a mutual fund which performed well in previous 3-5 year span ie. long term. Apart of that there are various methods of analysis you should use. Likewise attribution analysis evaluates a portfolio manager’s performance by determining how much return was from security selection and how much was from allocation/market timing. The total return is compared to a predetermined benchmark portfolio.
Next we will discuss about the things we should know about fund we choose along with brief on portfolio management.