On what parameters should one select a fund?

One should look for the history. If you look at DWS Investment Opportunity on most logical yardsticks, this fund will qualify. This fund has a good history and is evenly spread. It is a diversified fund and has sustained performance on a risk adjusted basis. It has given decent performance; decent return as well. So on those yardsticks; it still qualifies as a good fund.

The problem that the investor could face is reconciling with a 40% loss on a one-time investment. To prevent such situations one should be investing regularly not lump-sum in such investments.

For investing in equity, first checkpoint should be, are you investing for few years? The most important thing is one should not invest at one time and at one go because these kind of situations can arise with equity investments all the time. You see 15-20-25% decline even in a roaring bull market and that could be a test of patience and test of your nerve the moment you invest in equity. To guard that you cannot do anything about the market, the index but you can certainly do something about the way you invest.

Midcap funds are difficult to manage when they become very large. They are constrained by liquidity issues not in a roaring bull market but in a bear phase like this. They certainly face liquidity issues and concerns, which is difficult to address and handle.

(Source: value research)