Amid the surging markets, mutual fund experts are warning investors against solely relying on past performance, betting on the popularity of fund managers, or following trendy investment fads. Instead, investors should exercise more caution, especially as they are investing at the market's peak. The focus should be on selecting funds with a well-defined investment process, robust risk management, and consistent performance.

Dwaipayan Bose, co-Founder of Advisor Khoj, points out that in a robust market cycle, the performance of fund managers and institutions tends to fluctuate, particularly if they fail to adapt to changing market conditions.

Bose cites a recent investor education campaign by Nippon India, highlighting the significance of a strong investment process. In the complex world of fund management, even the best minds can make mistakes. Nippon India employs a stringent, system-driven process in each of its schemes to minimize potential biases and ensure a balanced approach.

Risk management is crucial for funds to perform well not only during good times but also to safeguard investors' interests during challenging periods. Risks can arise from market volatility, credit risk, interest rates, and inflation. AMFI (Association of Mutual Funds in India) has urged AMC's (Asset Management Companies) to implement robust risk avoidance systems.

Deepak Chainani, a mutual fund distributor, advises investors in a bullish market to focus on funds with consistent performance rather than chasing fleeting trends. Nippon India's processes, he explains, prevent concentration bias and excessive buying in particular stocks. The AMC strictly adheres to norms regarding deviations from indices and company-level exposures to maintain its commitment to consistency.

As SEBI regulations already protect investors from concentration risk, AMC's such as SBI Mutual Fund, Kotak Mutual Fund, and ICICI Prudential are further tightening their process framework to enhance investor safeguards.