9. Investment objective

Ask your mutual fund agent to tell you the investment objective of the fund: What is the fund trying to provide to you?

Long-term capital appreciation is not an investment objective -- every fund tries to provide that and every investor wants that. Examples of investment objectives are tracking the Nifty, providing roughly 5 per cent over the Nifty, or providing 10 per cent a year in all market environments (bull or bear).

An investment objective should be concrete and realistic -- 50 per cent returns every year is not realistic.

Once you know the fund's objective you can correctly evaluate its performance -- a fund whose goal is to track the benchmark cannot be criticised for not outperforming it.