Does higher return necessarily mean a better fund?
Yes, on the face of it high return does connote good fund but there is also some a risk taken by the scheme to achieve these returns. Thus it is prudent to measure risk alsowhile considering returns to rank a scheme. Today there are a lot of statistical tools like Beta, Sharpe ratio, Alpha and Standard Deviation to measure this risk. A risk adjusted return is the best measure to use while judging a scheme. You can also refer to the ratings assigned by a reputed rating agency.
