The primary way to select a mutual fund is to first match the mutual fund category with the time horizon of your financial goals. Once you have selected the category of the mutual fund, you could use the combination of parameters below to shortlist mutual fund scheme:

• Past performance vs. benchmark
  
  
• Fund manager’s track record
  
  
• Risk level (based on your risk appetite & goals)
  
  
• Portfolio quality
• And other technical parameters

Avoid choosing funds solely based on star ratings, as these are based on historical performance and may not reflect future potential. While several platforms provide mutual fund research and ratings, this data is generic and should not be the only basis for making investment decisions

It is generally advisable to maintain a fair mix of large-cap, mid-cap, and small-cap in your portfolio for a well-balanced growth and risk management. Mutual funds should not be selected solely based on past performance, as that does not guarantee future returns. Funds also follow different investment styles, such as growth or value, and having a mix of these styles can further diversify your portfolio to suit different market cycles. Read our article on “How to build a Resilient Equity MF Portfolio” for a detailed understanding about this.