Mutual funds investors are generally aware of the SIP method to invest. But what if you want to invest a lump sum amount when you have a surplus? You should know that, as per experts, investing a lump sum amount in Mutual Funds is much better than investing with SIPs, if a person has a long-term investment goal with an adequate amount of market knowledge.
Types of Mutual Fund Schemes
There are majorly two types of Mutual Funds: one is actively managed and the other is passively managed. The best method to know whether a mutual fund is active or passive is through the active number of shares.
“A zero active share indicates an exact replication of the index, while a 100 active share means there are no common holdings with the index. If a fund’s active share is below 60, it’s not an active fund, but rather a closet tracker or a tracker, so it’s best not to invest in such funds,” said Amit Gupta, MD of SAG Infotech.
So, finding active shares of a mutual fund is easy. The funds that are actively managed are mentioned on the fact sheet. But if it’s not easily available then you can review the top 10 shareholdings to get insights.
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Here’re the Expert Ways to Invest in Active Mutual Funds:
- Invest with SIP or STP at price falls.
- Create a diversified portfolio to minimise risk and increase returns.
- Also, put your money into diversified funds.
- “Invest in schemes of multiple fund houses to get the benefit of different fund management styles of various fund managers. Don’t invest in too many funds and multiple funds of the same fund house.”
Jitendra Solanki, Tax and Investment expert, at SEBI, said “For a large-cap category like the large and mid-cap is a good choice among active funds. With a flavour of mid-cap, these funds can generate good returns