parameter to compare the ROI of a mutual fund

what is the best parameter to compare the ROI of a mutual fund. Basically, how to compare two MF to decide which to buy?

When comparing mutual funds to decide which one to buy, there are several key parameters to consider:
  1. Returns: Look at the fund's historical returns over different time periods (1-year, 3-year, 5-year, etc.). Compare the fund's performance against its benchmark and similar funds within the same category.
  2. Expense Ratio: Consider the fund's expense ratio, which is the annual fee charged by the fund for managing your investments. Lower expense ratios can potentially result in higher returns.
  3. Risk: Evaluate the fund's risk profile by examining metrics like standard deviation and beta. Understand the fund's volatility and how it aligns with your risk tolerance.
  4. Fund Manager: Research the fund manager's experience, track record, and investment approach. A skilled and experienced manager can contribute to a fund's success.
  5. Investment Objective: Assess whether the fund's investment objective aligns with your financial goals. Different funds have different strategies and focus on specific sectors, asset classes, or investment styles.
  6. Fund Size and Assets Under Management (AUM): Consider the fund's size and AUM. While larger funds may offer stability, smaller funds might be more nimble and have the potential for higher growth.
  7. Fund Holdings and Diversification: Analyze the fund's holdings and diversification across different securities and sectors. Ensure the fund's holdings match your investment preferences and risk appetite.
It's important to note that comparing mutual funds involves a comprehensive analysis and should be done based on your individual investment goals, risk tolerance, and time horizon. Seeking professional financial advice can provide further guidance in making an informed investment decision.


Active Member
It's essential to consider multiple parameters:
Returns , Risk,Expense ratio,AUM,portfolio holdings,Fund manager,Tax efficiency,Investment Objective
When comparing mutual fund returns, focus on annualized returns over various time frames, considering 1, 3, 5 years, and since inception. Additionally, assess risk-adjusted returns using metrics like Sharpe ratio and Sortino ratio to account for volatility. Keep an eye on the expense ratio, aiming for lower costs. Examine historical performance and the fund manager's track record, considering consistency in returns and the fund's behavior across market cycles. Finally, analyze factors such as AUM, portfolio holdings, and dividend history to make an informed decision aligned with your investment goals and risk tolerance.

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