best fund

[aarohi]

Hi,

I need to know how can we find the best buy especially in this bull run.
most of them have invested in more or less simillar companies with the investment spread over them thinly.still thier NAV is varying greatly.


Now, looking at the companies in which they have invested, which one will not fall much when the sensex falls.

What should be the diffrenciating criteria considerin gthier is not much difference in thier investments.

 

[lonsharim]

aarohi,

NAV value is irrelevant. If a fund house has a NAV of 10 and another a NAV of 100 it means very little. Its just a number and its only importance is relative to its gain or loss.

which one will not fall much when the sensex falls

Mid and small cap stocks are most effected in a bearish phase. They also gain proportionally more during a bullish phase. During a bearish phase the liquidity of such stocks takes a beating. If the sole consideration for you is to stick to safe stocks, then go for the most liquid ones, i.e. the ones that constitute the top 100 in terms of market capitalization.

What should be the diffrenciating criteria considerin gthier is not much difference in thier investments.

Past performance, fund manager, fund management style, size of the fund etc. They say past performances should not be considered as an indicator for future performances, but they are still indicators none the less.

Lets say two funds are identical but one of the fund has replaced its manager who has done a stellar job in the last 3 years, the investing patterns, the style etc may change impacting returns. Say the fund is extremely large and bloated, the fund manager was quite aggressive when it started out and it gave impressive returns. Now it is a huge fund and the manager becomes more conservative.

There are other considerations, how much of the fund is still liquid cash? Fund managers need to have certain liquidity to meet the demands of investors cashing out. If there is not enough liquidity then they have to either borrow and sell off promising investments to meet the demands of investors selling their units.