The last one year was bad for equity markets, particularly in India, and its
impact was visible across equity mutual fund schemes irrespective of their rankings and fund houses.
However,
good funds managed to limit their losses when compared to their respective benchmarks. We bring you a comprehensive mutual fund scorecard with this edition so that you can track the performance of your mutual fund scheme(s).
With over 1,200 schemes investing in different assets (equity, debt and gold), and divided into different categorise, finding your scheme could be an onerous task. Keeping this in mind, we have divided each category (equity, debt and hybrid) into further sub-categories so that you can easily spot your fund.
However, it is important that you are able to make sense of the data given with your fund and use it in a meaningful way.
Here is a brief manual/guide to help you interpret data that we have compiled with the help of our knowledge partner Value Research.
FUND SCHEMEThe fund schemes in different categories and sub-categories are listed in an alphabetical order. The three broad categories are equity, hybrid and debt. These have been further divided into sub-categories such as large-cap, mid- and small-cap, tax planning, etc. The names are followed by the rating assigned to them by Value Research and the risk grade of the fund.
BASICSThe next three columns give details of the fund, such as the size of the corpus, the year it was launched and the period for which the current fund manager has been at the helm. The assets (AUM) of funds are as on 31 March 2011. It is important to know the duration for which the fund manager has been around. The longer his tenure, the more stable the fund's return.
PERFORMANCEOne of the best yardsticks for an equity mutual fund is its long-term performance. The longer the period, the more reliable the result. This is why, besides five-year, three-year and one-year returns, we have given 10-year returns for equity and hybrid funds. For debt funds, the period of evaluation is shorter.
Quartile ranking: Returns vary over time and should be judged in relation to schemes with similar objectives. A fund that has delivered consistent returns is better than one that delivers high returns when the market is up but wipes out your investment when they crash. So, a relative assessment is needed to give a true picture of the fund's performance.
This is given in quartile rankings for the past five years. The quartile ranking is simply a division of a particular category of funds into four parts. The top 25 per cent fall in the first quartile, the next 25 per cent in the second quartile, and so on. A fund that has consistently remained in the top quartile is obviously a good choice.
Bear market returns: The 2008 bear phase is now an old story. We saw another bear attack in the equity market between 5 May 2011 and 20 December 2011. You can check how your equity funds performed during those eight months. This is an important piece of information because only good funds will be able to minimise your losses when markets are falling. It is during a downturn that the true mettle of a fund manager is revealed.
PRICE AND COSTIf you are investing in a mutual fund for a longer period of 5-10 years, it is pertinent to know how much you are being charged every year.
Expense ratio: This is what a fund charges you in a year for managing your money.
Minimum initial investment: This is the minimum amount that you can invest in a fund. For equity funds, this may vary from Rs 500 to Rs 5,000. For debt funds it could be up to Rs 25,000 for retail investors.
