# Mutual Fund Investments

Which are the best mutual fund for the short term in form of SIP?
And how can I judge that which are best mutual fund?

use sharpe ratios to compare funds.

Sharpe ratio > 1 is better.

Can you please elaborate Sharpe ratio

plenty of stuff available online. you can get the definitions and explanations all over the web. but understanding the formula is key.

in simple terms , it show how well the risk adjusted returns are made by a fund or manager.

it shows how much returns are made after taking out risk free returns(normally 10 y govt bond) w.r.t the risk you are taking

so if nifty annual vol is 20% , which is the expected risk on downside.

so one fund manager or fund makes say 30% return in a year. you remove 7.5% from that because you are not taking any risk for that 7.5%. i.e there is no risk in that 7.5%. since this 7.5% is guaranteed by the govt bonds.

now you have 22.5% / 20% = 1.125 is the sharpe ratio.

you have now taken risk only for that 20% and you have returned more than 20% , hence the sharpe ratio is above 1. This is the risk adjusted return.

Very hard to go over 1 for many people in this business.

Everyone should calculate their performance using sharpe ratio. I bet most people will stop trading and start investing. LOL.

Pick the top 3 or 4 funds which have performed well over 5 years. The given link is for SIP.