Stop, Do you pick your mutual funds randomly or get confused about how to pick one for yourself? 1You need to understand the risk-return trade-off of your chosen fund. Remember a few basic fundas while selecting a mutual fund Look at the description of MFs, it will be highlighted on the scheme, stating in which category it will invest. (Equity, Debt, or bond...) 2 Remember basic funds that more risk is more return, if you are willing to take more risk, you can pick an Equity fund based on a particular sector, and if there is less risk then Debt funds. Always, check how the management will use your Rs.100 invested, which company will be allocated how much, or which sector it will invest.