New Delhi, Oct. 28 -- Investing in diversified active equity mutual funds, such as small-cap, mid-cap, large-cap, flexi-cap, and multi-cap funds, generally requires a long-term perspective because stock markets are volatile in the short term.

But what if a fund has positive three- and five-year returns but lags over one year? Experts say this warrants closer scrutiny. Here's what investors should assess before investing, reviewing their holdings or exiting.

Gaurav Garg, Head - Research, Lemonn said the 3- and 5-year returns are averages, and averages can hide a bad recent year behind one or two exceptional ones. He cited two examples.

Vedant Gupte, Co-Founder and CEO of Investment platform Trackk, said a weak one-year return in a falli...