However, given that the market is flooded with a plethora of small cap funds, you need a checklist that you can work through as an amateur to avoid taking any losses when you're investing for the first time. Given below is a checklist that would help you identify funds that suit your needs. It may seem trivial, but it is a crucial part of the investment process.
1) Thoroughly read the prospectus
The first thing that you should do with any mutual fund is to go through the prospectus with a fine-toothed comb. Every mutual fund has a prospectus and it contains information regarding the fund's management objective, fees, and past performance. While the fund managers are required to send you the prospected after you've invested, but it's too late by then. You need to go through the prospectus beforehand. Usually, you can find it on the mutual fund's website.
2) Take loads and fees into consideration
Every mutual fund charges a certain amount of money as a fee for providing its services. While some funds charge the fees upfront, others ask you for it when you sell your shares. The management fee is also an integral component of the cost of mutual funds and it is utilized for handling operational expenses. This information too is contained in the prospectus – which makes reading the prospectus carefully even more important.
3) Don't forget the past
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