Here is a couple of results from the automated mutual fund screener published last week. The main aim behind creating the tool is to enable users to rapidly shortlist mutual funds in a given category. This post primarily serves as an advertisement for the screener 🙂
Consistent performers (top 15) Equity-oriented Balanced funds
How to interpret results: BirlaSun Life 97 Fund has over the past 12 years always remained in the top 15 when 12,11,10,9,8,7,6,5,4,3,2 and 1 year returns (CAGR corresponding to lump sum investments) are considered. It therefore has a consistency score of 100%.
By the same count, DSPBR Balanced fund has only managed a score of 75%.
The rank (in this case top 15) can be changed by the user. I personally prefer casting a wider net.
Consistent performers (category average) Equity-oriented Balanced funds
How to interpret results: BirlaSun Life 97 Fund has over the past 12 years always beat the category average when 12,11,10,9,8,7,6,5,4,3,2 and 1 year returns (CAGR corresponding to lump sum investments) are considered. It therefore has a consistency score of 100%.
This post is not a recommendation for said fund!
The overlap between results depends on the rank input by the user (top 10 or 15 etc.)
This allows us to quickly create a shortlist.
Here are similar results for Mid and Small-cap funds
Consistent performers (top 15) Mid- and small-cap funds
Consistent performers (category average) Mid- and small-cap funds
What do you make of these results? I personally prefer older funds with a consistent track record. In the mid- and small-cap category, it might be a good idea to consider consistent performers that no one is talking about (therefore small AUM).
- This screener is meant to be used while choosing a new mutual fund and not for performance evaluation.
- The return that you have got will be quite different from the annual returns used here.
- This is a method to create a shortlist and not ch0ose funds.
- The risk associated with consistent performance will have to separately evaluated.
- I suggest that you calculate the downside risk for the funds in your shortlist with this tool: Mutual Fund Downside Protection Calculator and choose a fund with a consistently low downside capture ratio.
- Although the standard past performance disclaimer applies, there is merit in using this method because of these results: Mutual Fund Investing: Does Past Performance Matter?