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Love, Life And Everything Else 

How To Choose The Right Mutual Fund
 
Many people tend to look at three factors when considering which mutual funds to buy.  They would consider the fund size, fund price and the past performance of the mutual fund. These people would urge that a large mutual fund wuth it's bigger financial clout, is more stable and can have a bigger influence in the market. However, it has been consistently shown that fund size is not related to fund performance at all.
 
A cheap fund may also not always be better. All mutual funds have a base value of $1. The current price of the fund depends on the performance of the fund after it was launched. The cheaper funds may have been affected by the financial crisis and have yet to recover. Or they may have gone through a unit split. So the current price of a mutual fund is not a reference for buying. Cheap may not mean that it has performed poorly. Cheap may not mean a better return.
 
One way to select a mutual fund is to do a benchmaking. Most mutual funds will choose a relevant sector index for benchmarking and comparison. So you can assess the performance of the mutual fund as compared to the reference index. Or you can benchmark against a similar mutual fund. This way, you can assess the performance of each mutual fund more clearly. Of course, you should have heard this disclaimer that past performance is not indicative of future performance. So choose your mutual funds wisely in accordance with the risk that you are prepared to take.