Money Today-Value Research funds ready reference
Welcome to the mother of all catalogues of mutual funds that is far more than a mere listing. It is an analysis of 748 funds across 11 most relevant parameters of evaluation. The only schemes that have been left out are those catering exclusively to institutional buyers (most debt funds) and those launched after June 2008. To know what each parameter (column of tables) means, go through these explanations:
Fund scheme
The funds are listed in an alphabetical order under three broad categories—equity, balanced and debt. Look up the name of your fund scheme to compare its returns, costs, etc with other schemes. The tables of different categories appear in different colours. To ensure you don’t end up comparing apples with oranges, the three broad categories of fund schemes have been further classified into sub-categories. For instance, equity funds have been divided into equity diversified, equity tax planning, equity index and equity sectors. Open- and closed-ended funds have also been separated.
Performance
The return on an investment is the most significant indicator of a fund’s performance. But returns vary over time and should be judged in relation to investment schemes with similar objectives. The tables show the following measures of returns:
• 1-year return: Change in value in the past one year, as on 30 June 2008.
• Return since launch: Some funds are three months old, some 15 years and more. This column shows annualised return since launch. Compare these to know the stability of returns, but do it only for the funds that are at least three years old.
• Bear-phase return: When stock markets go in for a correction, equity funds tend to lose value. Usually, well-managed funds lose less than the average market index. We chose the period 8 Jan-30 June 2008 (when the Sensex fell by 35.5%) to judge the bear-phase return.
• Benchmark index: This is the index that the fund scheme uses to gauge its performance. The returns for this index should ideally be compared with the returns for the fund scheme to judge its performance.
Don’t miss out on the Money Today-Value Research (MT-VR) ratings of the top three funds across five categories. We have also listed data that could add a unique dimension to your analysis. For instance, it should be interesting to know which equity diversified fund was hurt the least in the bear phase.
| Detailed graphic: Equity Funds 1 | Detailed graphic: Equity Funds 2 |
Most of the 370 equity schemes listed here lost money in the past year. The best performer managed to give 19.77% return, while the worst performer lost 34.33%. Find out who were the leaders and the laggards. Balanced funds didn’t do as badly as equity funds. The 132 schemes across four categories lost an average 8.5% in the past year. The best performer gave 32.6% return, and the worst lost 11%. See how they all fared. The 246 debt funds across eight categories listed below posted an average return of 6.24% in the past year. The best performer gave 11.78% return, while the worst fund gave -5.64%. Find out how much your fund earned. | |
Price and cost
A fund with an above-average return could also be the one with above-average costs, which would affect the net return. The parameters are:
• NAV (Net Asset Value): This is the value (price) of one unit of the fund scheme and is calculated by dividing the total assets of a fund (AUM) by the total number of units. A higher NAV doesn’t mean the fund is more expensive or that its returns will be lower.
• Minimum SIP: Is the minimum amount you can invest in a fund under the systematic investment plan. A lower SIP makes the fund more accessible to small investors.
• Expense ratio: Represents the percentage of funds’ assets deducted annually to pay for management fee and other expenses. The higher the ratio, the costlier the fund.
Basics
Apart from returns and cost, there are four fundamentals to keep in mind:
• Launch: The month and year of launch.
• Assets: The total AUM of fund scheme as on 30 June 2008. The size of assets usually has no bearing on the returns from a fund.
• Fund manager, since: Shows the tenure of the manager. Generally, the longer the tenure, the more relevant the performance numbers.
• Investment style: Describes the kind of companies the funds invest most heavily in. Companies are divided into large (with huge market capitalisation), mid-size and small, and also as the ones with growth or value stocks, or a blend of the two. We arrived at six investment styles for equity and balanced funds, and nine styles for debt funds. The key issues are the quality of holdings and their sensitivity to interest rate fluctuations. The investment styles move from low quality-low sensitivity (LQLS) to high quality-high sensitivity (HQ-HS).
