A mutual fund strategy refers to the overall plan and choices a fund manager adopts to meet defined investment objectives. It involves pooling money from many investors and investing it in a diversified portfolio that may include stocks, bonds, or other securities. The strategy outlines critical aspects such as the type of assets to be held, the preferred investment horizon (short-term or long-term), the level of risk the fund is willing to take, and the chosen investment style—such as growth, value, or a blended approach. Together, these decisions guide how the fund is managed to achieve its goals.
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.
Why invest in multiple mutual funds?
Investing in multiple mutual funds allows you to spread your money across different asset classes, sectors, and strategies, reducing the risk of relying too heavily on a single fund. Each mutual fund has its own objectives—some focus on equity for growth, others on debt for stability, and some on hybrid allocations for balance. By diversifying across multiple funds, you can benefit from varied market opportunities and cushion your portfolio against volatility.
For instance, a market downturn in equities may be offset by steady returns from debt funds. Similarly, sector-specific risks can be balanced by exposure to broader market funds. This approach also helps investors align different funds with multiple financial goals, such as short-term liquidity, medium-term needs, and long-term wealth creation.
Things to consider while forming your mutual fund investment strategy
Identify your goals
The foundation of any mutual fund investment strategy is setting clear financial goals. Whether it’s saving for a car, planning early retirement, or building an emergency fund, categorise your goals into short-term, medium-term, and long-term to choose the right investment path.Select schemes based on features
Once goals are defined, identify mutual fund categories that align with them. Evaluate schemes based on performance history, expense ratio, fund manager expertise, and risk profile before making a decision.Diversify across asset classes
A balanced portfolio spreads risk and maximises returns. For instance, you might allocate liquid funds for emergencies, equities for long-term growth, and gold to hedge against market volatility.Invest regularly via SIPs
Systematic Investment Plans (SIPs) instil discipline and consistency. Using a SIP calculator helps plan monthly contributions aligned with your goals.Review your portfolio periodically
Revisit your investments at regular intervals or when major financial milestones are achieved. Adjust allocations if required to stay on track.
Key takeaways
Mutual funds help reduce risk by spreading investments across multiple securities, creating a diversified portfolio with potentially steadier returns.
By investing in mutual funds, you benefit from the expertise of professional fund managers who handle research, selection, and monitoring of investments.
They are generally convenient and liquid, allowing investors to buy or redeem units with ease when required.
While building a portfolio of mutual funds, the key is to maintain diversification across asset classes and select funds that complement each other for added value.
Conclusion
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.
