Quite often, a mutual fund investor unknowingly invests in two funds that are almost exactly similar to one another. Both funds belong to the same category, follow the same benchmark and invest within the same universe of stocks. It might also happen that both funds also hail from the same AMC. In such a situation, replication of funds would add no value to the investorís portfolio.
Letís say you find yourself in such a situation, and realise that you need to stop investing in one of your two similar funds and replace it with a different kind of fund. But if the two funds have been putting in matching returns, how do you decide which one to let go of? One way to decide would be to evaluate their performances over various time periods. It would be advisable to keep investing in the fund that has fared better in bearish markets. A look at the returns generated by both funds between January 8, 2008 and March 8, 2009 could be immensely useful in helping you come to a decision.
But how do you get the returns data between two such specific dates? Who would provide you with this information? Well, you can get the data by yourself by using the Value Research Point-to-Point Returns tool.
Available on the home page of ValueResearchOnline.com, the Point-to-Point Returns tool ranks mutual funds by their returns over any specified period of time. Enter the Start Date and End Date, and hit the Get Data button. Youíll be presented with a list of funds ranked by their performance, with the fund generating the highest returns at the top of the list.
The Point-to-Point Returns allows you to further narrow down your search in terms of Fund House, Category, Fund Type and Value Research Fund Rating. This way, you can not only find out which one of your two funds has performed well, you can also evaluate their performance against the performance of their peers. If you find that both of your funds have underperformed vis-ŗ-vis the others in its category, you could do well to get rid of both of them.
One of the very few tools available for free that give you such a micro-analysis of the returns generated by funds over a specific time period, the Point-to-Point Returns tool can be a great aid in your decision-making process.