The investment checklist helps you with a quick check of the fund's health. Mutual funds are evaluated on 4 different parameters like Returns, Expense ratios, Return vs FD rates, and Red flags.
1. Returns - The fund's average annual rolling returns over the last three years are compared against the funds from the same category.
2- Expense Ratios - Its the fee paid by the investors of mutual funds. This ratio is compared against the expense ratio of other funds in the same category to check if the fund is charging more or less when compared to the other funds in the same category.
3- Return vs FD rates - If the fund's return is lower than the average fixed deposits offered by the banks, investors are better off investing in the FD and vice versa.
4- Red flags - Red flags mean that the instrument has associated dangers or risks. That said, a mutual fund with red flags is relatively riskier than those that have no red flags. Mutual funds can have red flags due to various reasons depending on the type of fund. Read in-depth here.