Many investors commonly make the mistake of investing in a fund just because it delivered very high returns in the last one year, according to Radhika Gupta, MD & CEO, Edelweiss Mutual Fund. She also believes that it is the most expensive fund that an investor has added to their portfolio.

She said in a post on X, “The most expensive fund is the one you bought for last year’s returns. Return chasing feels rational. It’s usually late. Consistency looks boring. Its usually effective.”

According to her, when a fund performs very well in one year, many people rush to invest in it but markets keep changing. A fund that did very well last year may not do the same this year. By the time most investors enter, the strong phase may already be over.

Investors who entered at the peak may find themselves facing muted performance or even volatility soon after investing. She also points out that funds giving steady and stable returns usually don’t get much attention. They may not look exciting, but they help money grow slowly and steadily over time.