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Investment Objective

Updated on March 19, 2023

Investment objective is a statement of purpose which gives details about the asset allocation, risk parameters, expected returns and the strategy to be followed, in addition to other aspects, by the mutual fund. A mutual fund, at its launch or in its NFO (New Fund Offer), needs to state its investment process to be carried out for the given time period. The offer document of the fund should be able to help prospective investors understand what the Fund Manager is going to do with their money. If investors are unable to clearly grasp the investment objective of the fund, it will reflect poorly on its investment process and management strength.

Why is investment objective of a mutual fund important?

It is important for investors to look at a mutual fund’s investment objective because:
1. The mutual fund clearly states what its target is, in terms of returns and how the Fund Manager plans to achieve those targets.
2. It also shows how the scheme plans to allocate its assets.
3. It helps an investor develop an understanding about the future prospects of the fund.