Make more money, get the first-mover advantage; here is how

Mutual Funds are considered a safe way to invest in equities as they allow you to take advantage of a fund manager who uses his wit, experience and grit to get more money for you than otherwise would have been possible. However, a fund manager's role comes into play when you have actually bought into a mutual fund scheme. So, your decision to choose an investment tool is as important as the fund managers involved with the mutual fund house. According to investment experts, a mutual fund investor should apply the top-down strategy while choosing a mutual fund scheme. 

Speaking on the top-down strategy in mutual fund plan selection, Neelabh Sanyal, COO, Kuwera said, "The top-down strategy in mutual fund means listing out the expenses of the investor. It helps an investor to know which sector is expected to perform better in the coming times. For example, there are rumours of a cut in the income tax exemption limit. In such a case, one's expenses would go up. In the case of more purchasing power capacity, one would spend more on movies, food joints etc. So, it reflects that in the coming times cineplexes, entertainment and hospitality related companies are expected to perform better. So, if you are planning to go for more investments after the income tax relaxation, you should choose a fund that has higher exposure in such companies."

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On how does a top-down strategy helps an investor enhance income, Neelabh said, "Top-down strategy while choosing a mutual fund helps an investor board the train in the early phase of the rise in returns of the fund. So, by the time others would be jumping on the same mutual fund bandwagon that you are on, one would have already have achieved a few monetary goals." 

Neelabh said that the top-down approach helps a mutual fund investor to know which industry is expected to perform better. Then it becomes easier to fish out the companies that are expected to outperform their rivals as the majority of the company's balance sheet and other fundamentals are now available in the public domain.