Mutual Fund investors always take the route of SIPs or Systematic Investment Plans to park their money. But there are times when an investor has a lump sum amount to invest. However, lump sum investment options in MFs are only recommended for investors who are familiar with the market trends, its risks, and have a long-term plan to invest. Anyways, mutual funds are managed in two ways: active and passive.
Investing in Active Mutual Funds
Before investing in active mutual funds the very first thing to consider is checking if it is genuinely active or not. It may or may not be an expensive tracker. The most simple way to find out is to look for the active shares of a mutual fund. As per experts, in the long run, high-risk and high-return funds outperforms the low-risk index funds.
Other than this, there is size. As per the studies, new funds can perform better than the large ones. The reason for this is that the new funds can grab those opportunities which the larger funds have already missed.
How You Can Invest in Active Mutual Funds?
- You can invest in three ways: Lump sum or Systematic Investment Plans or SIPs and staggered transfer plans (STP).
- Always diversify your fund portfolios across different plans based on various factors.
- Also, don’t have too many options. Don’t invest in more than five funds.
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“Active funds are a suitable option for a large-cap category like the large and mid-cap. These funds can produce positive returns because of their mid-cap character. Flexi Cap Funds and Multi-Asset Funds can also be good options among Active Funds,” mentioned financial express.
“Active investing offers numerous benefits, including risk mitigation. It enables investment managers to make real-time adjustments to their client’s portfolios based on the current market conditions. Whether it’s diversification, retirement income, or a specific investment return, active investing allows money managers to cater to the unique needs of their clients,” mentioned further.
