The Value Research risk grade captures the relative risk of a fund as compared to its peers in the same category
03-Apr-2015 •Research Desk
I follow your mutual fund ratings. But I don't understand one point. As all tax savers are equity funds, their risks will be high, but your MF ratings classify Axis Long Term Equity Fund as low risk and Reliance Tax as high risk. What does this mean?
- Subbarao Ganeshna
The Value Research risk grade only captures the relative risk of a fund as compared to its peers in the same category. It is not an absolute measure. Therefore, this means that within the tax saving equity funds, Axis Long Term Equity Fund has been better at containing losses than Reliance Tax Saver.
The Value Research risk scale captures the number of periods where the fund has underperformed a risk- free guaranteed investment, like a bank term deposit. Hence, "Low risk" for Axis Long Term Equity Fund indicates that the fund has mostly delivered more than the risk-free investment, whereas Reliance Tax Saver Fund has underperformed the risk-free investment on more occasions.