Why mutual funds fail to deliver -4 highly ignored reasons

 Investing based on past performance
This is the primary method for selecting a mutual fund. We look at the past performance of the fund and then choose to invest in it. Nothing wrong with that but, how long is the past that you check? There are multiple funds which have performed for 3-6 months but failed later. Consistency is what matters here. You should ideally be checking the 3 year and 5 year performances of the fund rather than for 6 months. It would tell you if the fund was able to tide over various market cycles and interest rates. The top funds have been those which withstand the downside and then performed when the time arrived. Giving time for performance of the fund is very essential especially for equity funds which usually fail in short term but have potential to perform in the long term.

You may have chosen the right fund with a great track record. However, one thing which is always uncertain is the market. The market here includes stock market in case of equity funds as well as interest rate market for debt funds. If you have been into investing, you might understand this better. You must have seen recession, interest rate hikes, etc. All of these dent your mutual fund investment. Even the best of best funds have taken a hit in tough times. Some of them have recovered as there was value in those funds. One thing which you should always avoid is timing the markets. The more you try to time it, the more you lose. Of course, losing or winning in mutual funds depends on the fund managers timing the markets. It's their job to do so. If you believe that you have got the fundamentals right in picking a fund, you should not worry about short term ups and downs of the market. Have patience.
Fund Manager
This could be the significant reason behind failure of the fund. A fund manager is the backbone of a fund. He/she is responsible for the fund's success or failure. Stock picking, timing the markets, predicting the interest rate movement, etc. are usually handled by the fund manager. Usually, the best funds have been those where it had great fund managers who performed consistently for it. Frequent change of fund managers may be a danger signal for you. Though it is difficult for a common man to monitor the fund manager's performance, it could be worth having a glance at the past performance and credibility of the fund manager.
Size of fund
Some call it AUM (Assets Under Management), some call it size. It is the amount that a fund manages. Does it matter to you how much corpus a fund manages? It may not affect you much. But, if you are looking to redeem a fund within few months of investing, a small sized fund may or may not allow you to do it. There have been cases where funds have had liquidity crunch and investors had to wait to redeem units. This may not happen in a large sized fund as lots of money flows into them.