This Hindi video by Ankur Warikoo discusses common mistakes investors make when selecting mutual funds. It uses the Peter Lynch Magellan Fund as a case study to illustrate the importance of long-term investment strategies and avoiding panic selling. The video then outlines key factors to consider when choosing mutual funds in 2025, emphasizing a balanced approach and passive long-term investment.
Avoid focusing solely on past performance: Past performance is not indicative of future returns. The video cites the example of HSBC's mid-cap fund, which performed exceptionally well in 2018 but poorly in subsequent years.
Don't over-diversify: Mutual funds are portfolios of stocks, so investing in many funds with overlapping holdings doesn't necessarily reduce risk. The speaker suggests focusing on a maximum of four themes (e.g., large-cap, mid-cap, small-cap, flexi-cap) with percentages adjusted to one's risk tolerance.
Understand the nature of market returns: Market returns are not consistent. While an index might average 12% annually over ten years, some years will have higher returns, while others might be negative. Investors should not panic-sell during short-term dips.
Be active with income, passive with investments: Actively seek multiple income streams, but be passive in your investment approach, avoiding frequent trading based on short-term market fluctuations. Let the fund manager handle the portfolio adjustments.
Consider fund size: Very large small-cap mutual funds might struggle to find suitable investment opportunities due to their size, potentially impacting future performance. A reasonable Asset Under Management (AUM) should be considered.
