Mutual Fund Investing Strategies

Effective mutual fund strategies involve thorough research, diversification, and alignment with investment goals to get better results in mutual fund investment.
Mutual Fund Investing Strategies
3 min

Investing in mutual funds can be tricky. This is mainly because of volatility in the market and the dynamic economic environment. To get better results in mutual fund investment, adopt effective strategies like thorough research on fund performance and fees, diversifying across asset classes and sectors, aligning investments with financial goals, and regularly reviewing and adjusting the portfolio to maintain balance and mitigate risk.

As mutual funds invest money in stocks, bonds, and other securities, they are exposed to market related risks. However, you can beat the market and make higher returns if you use some smart mutual fund investing strategies. Use mutual fund strategies to achieve your financial goals and also maximise your portfolio returns. Let us explore some of the major strategies in this article.

Top 3 Mutual fund investing strategies to maximise ROI

Below mentioned are top 3 investment strategies that help to maximize the ROI from Mutual Fund Investing:

Mutual fund strategy 1: SIP (Systematic Investment Plan)

You can average out the volatility risk of the market by using the SIP investment (Systematic Investment Plan) strategy. In this strategy, you make an investment of a fixed amount (say, Rs. 1,000) every month or on a regular interval. When you invest regularly in a mutual fund (MF) scheme every month or week or in a quarter, you can harness the benefits of Rupee Cost Averaging (RCA).

As you invest a certain amount of money in buying units of a mutual fund scheme every month, you buy units when the market is up or down. When the market is up, you buy more units of that MF scheme. But when the market is down, you buy less units of that scheme. This will lower your average cost of investment when you keep investing regularly in a scheme for a longer period of time, say, 3 years or 5 years or more.

No matter how much volatility is there in the market, you always average out that risk by investing regularly in a scheme.

The SIP mutual fund investing strategy ensures that in the long run, you get more MF units at a comparatively lower price. If you want to avoid the uncertainty of the market, you may adopt the SIP strategy in the long run and also get a decent return, which is way more than fixed deposit or other fixed income assets.

You may explore the Bajaj Finserv Mutual Fund Platform to check more than 1000 mutual funds schemes listed on the platform. First compare the mutual funds and once you select the best suited MF scheme for your financial goals, start investing through SIP.

Mutual fund strategy 2: Market timing

This is a strategy, most suitable for the pro investors. It requires you to time the market correctly to make a profit. According to this strategy, you are required to buy mutual fund schemes at a lower price or NAV (Net Asset Value) and sell at a higher price.

If you learn technical analysis, fundamental analysis, and other financial techniques, you may predict the right time to invest or sell your mutual fund units. You should be able to read the price charts and financial indicators to make a better prediction of the price movement of the market.

Though no one can time the market consistently to make money, you should try to maximise your optimal market timing strategy (buying at a low price and selling at a higher price) for making more profits than losses. This will help you earn handsomely by timing the market correctly most of the time. Always compare multiple mutual funds to choose the best scheme. Before investing, check the SIP calculator or the lumpsum calculator to get an idea of the possible return from your investment.

Mutual fund strategy 3: Buy and hold

Are you a long term investor? If yes, it is one of the best mutual fund investing strategies. It has been considered by ace investor Warren Buffet as ideal for long term investors. According to the buy and hold strategy, you can buy mutual fund units in lumpsum investment.

No matter how the market condition is, you have to invest in mutual fund schemes and hold on to your investment for 3 years, 5 years, or more. The basic assumption of this strategy is that the market will grow in the long run. Even if your portfolio of investment makes losses in the short to medium run, the growth in the market over time will outweigh your losses.

To achieve excellent growth, you simply have to keep your money invested for the long run. There are many investors who buy stocks to hold on to them for 20 years or even more. They, essentially, sell them for long term capital gains and usually use the money for retirement or to meet other financial goals such as higher education for children, marriage expenses, etc.


Mutual fund investing strategies are not rocket sciences. In the words of Warren Buffet, you can make money from investing in the market with simple decision making skills, ability to keep emotions aside, and a sound intellectual framework to invest at the right time.

What are you waiting for? Start investing in mutual funds now. Explore the Bajaj Finserv Mutual Fund Platform, compare mutual funds, and choose the right mutual fund scheme to meet your financial goals. Now, start investing by using the above mentioned  mutual fund investing strategies.

Calculate your expected investment returns with the help of our investment calculators

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Frequently asked questions

What is the best strategy for mutual funds?

Investing through SIP (Systematic Investment Plan) is the best strategy for mutual funds, if you want to average out the market volatility in the long run.

What is the 4 fund investment strategy?

The 4 mutual fund investing strategies are market timing strategy, buy-and-hold strategy, the wing-it strategy, and the performance weighting strategy.

Which is better way to invest in mutual funds?

There is no ideal way to invest in mutual funds. Your best way of investing depends upon your financial goals, time frame to stay invested, and other factors. However, long term investment in mutual funds are always considered better because the propensity to make losses decrease over time.

What are 3 ways to make money with mutual funds?

The three ways to make money with mutual funds are to earn dividends, make capital gains, and let the value of the fund increase over time.

What is the 3-5-10 rule for mutual funds?

According to the 3-5-10 rule, mutual funds are prohibited from acquiring over three percent share of a registered investment company, investing over five percent and ten percent of its total asset in a single company.

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Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.