Mutual fund investing can be rewarding. However, choosing the correct fund scheme can be often challenging. With varied options available – how do you select the best match? Here’s where mutual fund screener tools come in handy.
Such tools assist retail investors filter funds depending on criteria such as risk, returns, expenses, and ratings. Whether you are a seasoned retail investor or a beginner, being aware of these tools can considerably simplify your investment journey. Let’s deep dive into how they function but before that let’s understand what mutual fund screener tools are.
What are mutual fund screener tools?
Mutual fund screener tools are digital platforms tailored to assist retail investors narrow down their choices by applying particular filters. Instead of manually evaluating hundreds of fund schemes, these online tools permit users to shortlist options depending on essential parameters such as previous performance, risk levels, expense ratios and other parameters.
For instance, if you are searching for a tax-saving mutual fund scheme with moderate risk, such tools can instantly show up funds that match your needs and criteria. This saves considerable time and make the process of investment more organised.
- What are the top features of a mutual fund screener tool?
The mutual fund screener tool’s effectiveness is based on its features. Here are some key aspects to consider:
- Performance metrics
These tools show past returns across different time horizons (one year, three years, five years). This assist in examining long-term potential and consistency.
- Risk assessment
Metrics such as standard deviation, beta, and the Sharpe ratio indicate how volatile a fund is. For example, a low standard deviation suggests more stability.
- Expense ratios
Expense ratio shows the annual fees charged by the fund scheme. Lower ratios infer more of your returns remain with you, which is critical for long-term growth.
- Fund ratings
Many screener tools incorporate ratings from reputable agencies like CRISIL or Morningstar. Such ratings show the quality and performance of the fund.
- Portfolio insights
Detailed information on top holdings, sector allocation, and asset distribution assist in assessing whether the fund is in line with your investment philosophy.
- Why are these tools important?
Investing without research can be risky. Mutual fund screener tools simplify the decision-making process by offering side-by-side comparisons of multiple funds. Here is why they matter:
- Time efficiency
Instead of spending hours researching, such tools filter out irrelevant funds in seconds.
- Well-informed decision-making
They provide a data-driven approach by offering crucial insights on returns, risk, and expenses.
- Personalisation
Whether you want high returns or low risk, such tools let you adjust filters to match your goals.
- Transparency
By presenting relevant information in one place, they make it simpler to compare funds objectively.
- How to use a mutual fund screener tool?
Using a mutual fund screener tool is simple. But it requires a clear understanding of your financial objectives. Listed here is a stepwise guide:
- Step no. 1
Define your goal
What goals are you looking for? Are you looking for growth, regular income, or tax savings? Your goal determines which fund scheme you must focus on.
- Step no. 2
Set parameters
Once your goal is clear, adjust filters – risk level, returns, and expense ratio. For instance, if you prioritise safety, then look for fund schemes with high credit ratings and low volatility.
- Step no. 3
Analyse the outcomes
Look at the filtered list and compare key metrics. Examine the consistency of returns, risk profile, and fund size.
- Step no. 4
Cross-check ratings
Check independent ratings as well as reviews to make sure the fund is credible.
- Step no. 5
Review periodically
Even after investing, ensure to revisit the tool to track fund performance and adjust if needed.
Ending note
Mutual fund screener tools are invaluable for both new and experienced retail investors. They streamline the selection process by offering personalised options depending on personal goals.
By concentrating on key metrics such as returns, risk, and expenses, these tools enhance the quality of investment decisions. Note that using them regularly can help maintain a well-balanced and high-performing portfolio.
