How we pick funds
The rules, and the reason for each one.
The same answers and the same data always give the same funds. A person can check any pick against these rules. Ask only explains what the rules chose.
Emergency fund first
If you don't have one yet, the first suggestion is 3 to 6 months of expenses in a liquid fund. You can skip it.
Why: Without a buffer, a surprise bill can force you to sell investments when they're down.
Your goal's timeline sets the mix
| Goal is | What goes in |
|---|---|
| Under 1 year | Liquid, money market or overnight funds only |
| 1 to 3 years | Short duration, ultra-short or arbitrage funds. No equity |
| 3 to 5 years | Hybrid funds plus short duration debt |
| 5 to 7 years | 40% to 80% equity depending on your risk level, the rest hybrid or debt |
| 7 years or more | 60% to 100% equity depending on your risk level |
Your risk level comes from 5 questions. You can lower it for a goal, never raise it.
Why: Equity can fall 30% or more in a bad year and may take years to recover. Money you need soon shouldn't be in it.
What we never suggest
- Sector and theme funds: one industry's bad year is your bad year.
- Credit risk funds: they lend to weaker companies for extra return.
- New fund offers: no track record to judge.
- Equity and hybrid funds under 4 years old, debt funds under 3.
- Small and mid cap funds if your risk level is conservative.
Why: Each of these can go very wrong for a first-time investor, and none is needed for a simple, long-term portfolio.
A minimum size
Equity funds need at least ₹500 crore under management, hybrid and debt funds ₹1,000 crore, liquid and money market funds ₹2,000 crore.
Why: When big investors pull out of a very small fund, the fund may have to sell in a hurry.
Within a category, a score out of 100
- Consistency, 40%: its typical 3-year return over the last 5 years.
- Downside, 25%: how far it fell, and how often it trailed its category.
- Cost, 20%: a lower fee scores higher.
- Stability, 15%: size and age, capped so the biggest funds don't win by default.
Funds are compared only with others in the same category. The bottom 40% are never suggested. Index funds tracking the same index are ranked by lowest fee, then size. Ties go to the older fund, then the larger one.
Why: Last year's top fund is often not next year's. Steadiness, smaller falls and lower fees hold up better.
Few funds
Up to ₹1,000 a month gets 1 fund. Up to ₹5,000 gets up to 2. Above that, up to 3. Beyond 5 funds in total, we suggest adding to the SIPs you already have.
Why: Fewer funds are easier to keep track of and stay with. More funds often means owning the same companies twice.
Spread out, and top up what you own
Picks come from different fund houses and sub-categories where possible. If a fund you already hold still fits and scores in the top half, we suggest adding to it instead of opening another.
Why: Two funds from the same fund house or sub-category tend to move together.
No churn
We review each goal once a year. We only suggest switching a fund after it sits in the bottom quarter of its category for 2 reviews in a row, and we show the exit load and estimated tax first. We never suggest selling during a market fall unless your goal date is close.
Why: Switching costs you exit load and tax, and one bad year says little about a fund.
Rules version 1. Every pick is saved with the rules version and the date of the data it used. When the rules change, this page changes with them.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.