Last Updated on January 12, 2023
Use this tool to compare the risk-adjusted year-on-year performance of two mutual funds over the last 8 years. This is an alternative to the previously published, fund A vs. fund B mutual fund analyzer, in which the comparison could be made for investment durations ranging from 1-8 years.
This year-on-year analyzer allows you to compare funds on a risk-adjusted basis over the last year*, year before that, year before that and so on.
*last year wrt to current NAV date.
When should you use this tool?
Get free money management solutions delivered to your mailbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
1) Decide on the mutual fund category you are going to invest in
2) Make a short-list (not more 4-5 funds). See this guide for how to do this within a few minutes.
3) You might consider using an additional filter. The above guide offers one way to do this. In the investor workshops, I recommend using Upside and Downside ratios, specifically consistently low downside capture ratios measured wrt to an appropriate benchmark (Morning Star gives you this for many funds). Will write a detailed post on this soon.
4) You can also use the Mutual Fund Risk and Return Analyzer , for more flexibility wrt benchmarks and risk-return metric, plus the ulcer index.
5) Whichever method you choose, if your shortlist is down to 2/3 funds and simply cannot choose between them, the present year-on-year comparison might help settle it for you.
6) There may be situations when you are invested in fund A and there is a buzz about fund B. You can this tool to objectively analyze risk-adjusted performance.
What does the tool offer?
Although the tool computes several metrics, user can prefer to simply use the relative risk-return score. A score of above 50% implies that fund A has done well and a score of less than 50% implies that fund B has done well.
For example, here is a comparison between Franklin India Blue Chip fund (fund A) and ICICI Pru Focussed Blue Chip fund (fund B).
Verdict: In the last few years, ICICI blue chip has comfortably beat Franklin blue chip. Franklin’s fund has appeared to have picked up its game since the start of the bull run.
You can also compare year-on-year SIP and lump sum returns (click to enlarge)
You can do an upside/downside capture ratio analysis.
The capture ratio = upside-capture-ratio/downside-capture-ratio.
When measured wrt to a benchmark (not the case here), if this is higher than 1, it means the fund has beat its benchmark.
In this case, the upside and downside capture ratios of fund A relative to that of fund B is measured. In terms of capture ratio, you cannot differentiate the funds but in terms of downside superiority, fund A (Franklin Blue Chip) is superior to fund B (ICICI blue chip).
Verdict: fund B take more risks than fund A, but it seems to have paid off in the recent past (with the exception of last year) with higher returns. So far, the risk appears to be worth it.
Is that enough for you to choose ICIC blue chip over Franklin blue chip? I think many would say, yes 🙂
Personally, I prefer funds with consistent downside protection. Don’t listen to me though. I am drowning in my conservative, pessimistic outlook.
One could argue that the ICICI fund was started after the 2008 crash and could choose stock appropriately, but the same was true of the Franklin fund when it was started after the Harshad Mehta scam and could pick and choose stocks freely when the Sensex was flat for several years.
Does this mean that when the market moves sideways it pays to have a ‘good’ fund with (reasonably) low AUM? hmm …
This tool is now part of the freefincal investor circle. Join the investor circle! Enjoy a 50% discount for a limited time and pay only Rs. 3000 with discount code circle50. You can get lifetime access to several unique tools, discussion forums, and bug fixes.
🔥Enjoy massive discounts on our courses and robo-advisory tool! 🔥
Use our Robo-advisory Excel Tool for a start-to-finish financial plan! ⇐ More than 1000 investors and advisors use this!
New Tool! => Track your mutual funds and stocks investments with this Google Sheet!
- Follow us on Google News.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Join our YouTube Community and explore more than 1000 videos!
- Have a question? Subscribe to our newsletter with this form.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Get free money management solutions delivered to your mailbox! Subscribe to get posts via email!
Explore the site! Search among our 2000+ articles for information and insight!
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu gets a superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low volatility stock screeners.
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)