Fund Ratings help you to select funds that have performed consistently year after year
01-Dec-2006 •Value Research
Trying to find a good fund? It isn't easy. To begin with, you need to check returns and pick out funds, which have beaten their benchmark as well as the category averages consistently, year after year. Usually higher returns are accompanied by higher risk. But how do you compare the risk of one fund with another? With 170 diversified equity funds alone, it will only add to your confusion. We offer you a much simpler solution - just check Value Research Fund Rating.
What is Value Research Fund Rating?
Fund rating is an innovative and objective measure, easily understood. It is a composite measure of both returns and risk. This single measure grades the funds (on the basis of their risk-adjusted return) on a scale of one-star to five-star (five-star being the best).
The Ratings Advantage
Ratings offer a few distinct advantages. Firstly, they are free from biases and are based only on fund's performance and the performance of peers. Therefore, they are not subject to the views or the opinion of any individual. You can read about our methodology in detail at valueresearchonline.com. Secondly, since only the funds with a long-term performance history are rated, our fund ratings also steer you clear of hoards of newer and newer funds.
How to Use Them?
Fund ratings make fund selection much simpler by identifying good funds. Focussing only upon the five- and four-star-rated funds is very likely to provide you with enough options to choose from. But you will have to make the final selection based upon your needs.
You will often come across funds, which have significantly different investment styles, but have the same rating. A high-risk high-return fund as well as a low-risk low-return fund can have the same risk-adjusted returns and hence, the same rating.
To illustrate, Franklin India Bluechip and Birla Mid Cap are both rated four-star, even though the former invests only in the bluechip stocks while the latter concentrates upon the mid- and small-caps. Therefore, you will have to sort out your preferences for any particular style or theme and choose the one to your liking, rather than blindly investing in a highly-rated fund.
You will find extensive use of the rating in this publication wherever we refer to mutual fund schemes..
Where to Get Them?
Fund ratings are calculated every month. They are updated at valueresearchonline.com and icicidirect.com regularly.
