Every Mutual Fund (MF) scheme has an investment objective and is managed by a designated fund manager, who is responsible for the fund performing optimally to achieve that objective.
This performance is affected by the decisions that the fund management team takes, the different phases in the capital market, business and economic conditions, and related micro and macro-economic factors etc. that can affect the MF scheme. Typically, all fund management teams have a process in place that dictates the choice of securities in the portfolio as defined in the Scheme Information Document. It is the performance of these securities, in varying market conditions, that finally dictates the scheme’s performance. This is why, you select different types of MF schemes for different goals and stay invested for varying period of times in different MF schemes.
Fund management teams make best efforts to take the right decisions based on investment objective, price, quality, risks, financials, news flows and economic developments.
It is however important to measure performance over realistic time horizons – long term for equity funds, medium term for hybrid funds or very short term for liquid funds.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.