How to choose a mutual fund that feels right , not just looks good
Because the best fund on paper means nothing if you can't stay invested
"There are so many mutual funds. How do I choose the best one for myself?"
It’s a question I get asked all the time. And honestly, it’s a fair one. The number of choices is overwhelming equity, hybrid, large-cap, flexi-cap, index, active, thematic the list is endless.
But here’s the tricky part:
There’s no single “right” answer.
Different investors, advisors, and experts will all give you different recommendations. Many of them are valid. And yet, despite all the advice out there, most investors end up picking funds that don’t suit them and worse, they often exit at exactly the wrong time.
So why does this happen?
The missing piece most investors overlook
In my view, it's because most people ignore one quiet but critical factor:
The investing style of the fund or more specifically, the consistent approach the AMC or fund manager uses to make decisions.
The uncomfortable truth about fund choice
No matter which fund you pic, invest via SIP or lump sum, invest in active or passive funds ,one thing is guaranteed:
Markets will go through cycles. And during those cycles, every fund and every style will have its ups and downs.
A skilled fund manager may help soften the blow during drawdowns or capture upside better. But here’s the catch:
You cannot judge that skill just by looking at past returns or star ratings.
Returns and ratings are outcomes, not intentions.
They show you what happened, not what the fund was trying to do. And they’re shaped by market conditions which no manager can control.
What fund houses can control is:
Their investing philosophy
How they select and size positions
How they manage risk
How they stay disciplined through market cycles
And that’s exactly what investing style tells you.
Style > Star rating
Chasing past returns is easy. But understanding investing style is what helps you:
Know how your money is being managed
Predict how your fund might behave in different market phases
And most importantly, stay invested with confidence
So, What is an investing style?
Every AMC and often each fund manager follows a specific philosophy when selecting stocks. These aren’t personal whims. They’re structured frameworks rooted in how they believe long-term wealth is created.
Here are five of the most common investing styles in Indian mutual funds:
1. Value style
Looks for stocks trading below their intrinsic value
Focuses on out-of-favor sectors or low P/E, high dividend companies
Tends to underperform for long periods, then rebound sharply
Reality check: There’s no fixed formula for “value.” Just because a stock has a low P/E doesn’t make it undervalued. Remember markets trade on beliefs, not formulas.
2. Growth style
Seeks companies with high earnings growth potential
Trades at higher valuations
Performs well in bull markets but can be volatile in corrections
3. GARP (growth at a reasonable price)
Blends growth potential with valuation discipline
Avoids both hyped-up and deep-value traps
Aims for long-term compounding with fewer extremes
4. Quality style
Prioritizes strong fundamentals: low debt, high ROCE, consistent profits
Common in large-cap or focused funds
Helps preserve capital and reduce anxiety during volatility
5. Blend/core style
Mixes elements of value, growth, and quality
Tracks or slightly outperforms the market
Great for “all-weather” investors seeking balance
The real question: what’s the right fund for you?
Here’s the truth:
Even the “best” fund will feel like the wrong one if its style doesn’t match your temperament.
Let’s look at four common investor types and which styles suit (or stress) them.
Ask yourself these questions before you choose a fund:
Am I conservative, aggressive, patient, or opportunistic?
How do I actually react to volatility?
Can I stay invested when a fund underperforms for 1–2 years?
Do I chase returns or understand the process behind them?
Answering these questions in advance is often the hardest part of investing. And it’s where many investors go wrong. Why? Because they’ve been told what to think not taught how to think for themselves.
At Stock Market Explainers, we don’t hand out generic answers. We help you arrive at your own through clarity, honesty, and zero noise so your investing decisions truly reflect who you are. Because in the long run, that’s what shapes your financial journey. Not the markets. Not the headlines. But the decisions you make.
Because here’s the thing:
Every fund even the best-managed ones will go through rough patches.
If your temperament can’t handle that, it’s not the fund that’s wrong. It’s just the wrong fit for you.
Fit > Fame
Choosing a mutual fund isn’t about finding the star performer.
It’s about finding a fund whose style you can stick with especially when markets get rough.
So if you’re confused, don’t start with ratings or returns. Start with yourself.
Understand your investing temperament. Then find a fund that matches it.
Let the market cycle.
Let the fund stay true to its style.
Let your strategy be boringly consistent.
That’s how long-term wealth is built.
Coming up next
In future posts, we’ll go deeper into the real drivers of success and why even the “right” fund may still disappoint if your approach is off:
Why your default risk appetite isn’t your real one
How AMCs invest by process, but investors invest by emotion and why that mismatch matters
Why you may be taking risks you don’t understand and expecting returns that won’t com
Why “long-term investing” sounds easy but is so hard to practice
Risk appetite isn’t just a phrase ,it’s the quiet force that can make or break your financial journey. The problem is, most investors have no clear way to truly understand theirs.
The real way to discover your risk appetite is by living through actual risk and that’s the risky part
And most importantly:
Why the gap between fund returns and your actual returns is the real problem
If you want to become the kind of investor who acts with confidence and clarity rather than reacting with confusion and fear subscribe to the official Stock Market Explainers newsletter on Substack.
Here’s the link: LinkedIn Company page
Final thought
We can’t predict events, their timing, or their impact on your mutual fund.
But we can understand:
Why a fund is volatile
Why your returns differ from the NAV
Why expense ratios vary
Why performance doesn’t always mirror the market
Finding answers to these questions does two powerful things:
You stop getting influenced by what your neighbors are doing. And that’s half the battle won.
You handle volatility better. Because when you have unanswered questions, volatility isn’t just in the market it’s in your mind.
That leads to panic, blind exits, or endless switching. You chase answers, but you don’t know what the real question is. And over time, this chaos becomes a slow addiction. You won’t even realize it.
But once you start asking the right questions, you’ll make more confident, independent, and well-informed decisions. You can’t control market volatility.
But you can learn to manage your response to it. And when you do, your returns will start aligning with your expectations not just by luck, but by design.
Good Luck
 | A guest post by
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