Photo: iStockThe returns from a fund is the primary parameter while evaluating the performance of a mutual fund. Determining the hurdle rate requires balancing between different factors: if you need to accumulate a large corpus within a shorter period and are willing to take the risk, then you will set a higher hurdle rate if you cannot expand your savings. A good way to use the hurdle rate would be to filter out investments from the choices available in the selection process. A benchmark’s returns denote the returns from a market it represents for a particular period. For example, comparing a ultra-short debt fund that invests in short-term debt and money market instruments with a long duration debt fund gives you no data points to effectively evaluate performance.

Source: Mint January 07, 2019 02:37 UTC