How important is the track record of a fund house when it comes to investing in a scheme?
—Vivek Sheth
When it comes to evaluating a fund house, the notion of a track record is not the same as when evaluating a particular fund. With a fund, we can look at returns across different periods, systematic investment plan (SIP) returns, risks taken, and various ratios. These factors could together constitute an analysis of its track record. With a fund house, however, one has to look at factors such as size (the total assets under management), history (how long it has been around), stability in fund management, along with the aggregate performance of its funds, to evaluate its track record. For performance, one could look at how consistently the fund house has schemes in the top quartile across different market cycles.
For an investor who is seeking to invest for the really long term (over 15 or 20 years), the track record of the fund house she is investing with could play an important role in choosing funds. If a fund house has seen multiple market cycles and delivered top-performing funds over the years, an investor can be reasonably confident that her investments would be well managed over the long term.
