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The trailing returns of a fund that has not performed well for 4-5 years, but does exceedingly well in just 6 months, gives a very wrong picture. How do we guard against such misleading figures?
-Parag

The trailing returns of a fund that has not performed well for 4-5 years, but does exceedingly well in just 6 months, gives a very wrong picture. This fund, although bad, will emerge at the top in terms of returns across time horizons. The return figures for the last 3 years, 1 year, 6 months and 1 month will all show up as very good. It's a risky fund and should be avoided. But the return figures displayed on your website will paint an entirely different picture. How do we guard against such misleading figures?
-Parag

You have raised a valid concern. Many investors get swayed by sudden and gravity-defying returns of a few funds, while ignoring the consistent performance of some others during good as well as bad times alike. But we have always emphasised the importance of good performance over the long term. In fact, Value Research Rating is an effective tool to identify the long-term winners out of a long list of funds. You can refer to our ratings while making an investment decision.

While the rating is the single measure of a fund's relative performance on a risk-adjusted basis, you can also check the calendar year returns of the funds to gauge the consistency of a fund's performance. On our website, you can get the calendar year returns of each fund along with that of the key indices and the category averages so as to facilitate meaningful comparisons.



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