Avoid investing in actively managed large-cap mutual funds.

For what?

83% of them failed to beat the benchmark over a 5-year period.

You see, every actively managed fund tries to beat the benchmark. For large-cap funds, the benchmark is the NIFTY 100 index fund.

Now this index fund blindly invests in the 100 largest Indian companies in proportion to their size. Therefore, no fund manager actively reviews investments because everything is automated.

As a result, the expense ratio is ten times lower than that of actively managed large-cap funds.

So if a large cap fund is struggling to beat the index, why the hell are you investing in it and paying more in fees?

Active large-cap mutual funds lose their advantage as the country grows.

Mid and small cap mutual funds still have this advantage. The US stock market has already witnessed these changes.

How to invest?
Sort large-cap index funds in ascending order of expense ratio and tracking error
Filter funds less than 250 Crore
Give an 80% weight to expenses and a 20% weight to tracking error for ranking (the lower the better)
Choose the best in their respective category
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#financewithsharan #mutualfunds #investing for beginners #money tips #saving money #investing for beginners

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