“Which is the best way to compare my mutual fund with other funds from the same category?”. The best way would be to not compare the performance of the funds that you hold with others. The second best way would be to use the exact dates in which you invested and only those dates for the comparison. The third best way is to use this free tool that allows you to compare the performance of all funds in a category from the date in which you started investing in one of them.
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A disclaimer that this is not a sheet that I am proud of and will not be using it for my portfolio analysis. I prefer to only compare a fund with an appropriate benchmark. These days, I don’t even do this. The only reason I made this sheet is because
(a) I believe that if at all one wants to compare, this tool offers a better way than comparing performance for the last year, last 3Y, 5Y etc. For the record, such data (last 1,2,3,4,5,6,7,8,9Y, both lump sum and SIP return) is published here monthly.
(b) Many times, investors questions their choices and worry if they would have got better returns had they invested in other funds. This tool might put their minds at ease. On the other hand, it could make them worried as well (much higher probability?)!
So let me repeat, nothing beneficial can come out of a peer comparison.
How to use this tool
Well, don’t use it! If you still wish to:
step 1: identify the Value Research category your fund is listed under
step 2: choose this category in the sheet
step 3: run a small macro to select all funds in this category (this will work only Macro enabled Windows Excel 2007 and above installations).
step 4: choose the fund you have invested in. This will be the reference for upside and downside captures (see below).
step 5: Run the comparison macro. This will take anywhere between 15-20 minutes even on a reasonably fast machine. So run this accordingly. Maybe you can run this, grab a cupp and head over to freefincal to read more about Hwhy you should ignore mutual fund star ratings
The results should be fairly straightforward to interpret. From the start date that you have entered to the last business date, SIP and lump sum returns are calculated.
During this period, monthly returns of each fund is computed. Some months your fund would have given a negative return and some months a positive return.
Downside capture is a measure of how much of your fund’s losses other funds in the category captured. So a downside capture of 80% implies that a fund has overall captured only 80% of your fund’s losses. So lower this number, the better.
Upside capture is a measure of how much of your fund’s gains other funds captured. If a fund has an upside capture of 120%, then it means a fund has captured 20% extra returns when the periods over which your fund have a positive monthly return were considered. Higher the upside the better.
Capture ratio = Upside capture/ Downside capture. A value greater than 1 is considered “good”, it is important to consider the individual upside and downside values as well. A fund with low upside and high downside can result in high capture ratio.
As investors, we need a reasonable balance between risk (downside) and reward (upside).
HDFC Top 200 Fund
Regardless of its current star rating, from 17 Aug 2013, only a few funds have outperformed Top 200 and no fund has a better upside capture. It pays to stay invested in this fund over the long term.
Franklin India Blue Chip Fund
From 17th Aug 2007, Franklin Blue Chip has a great record.
From 17th Aug 2014, HDFC Equity has fared poorly if you make a peer comparison.
IDFC Premier Equity
From 17th Aug 2014, IDFC Premier Equity too has not done well.
Please note: Both a positive result or a negative result mean little. It is based on past performance. I urge you not to take either result too seriously and I certainly will not be responsible for any investment decision that you make.
I prefer to review my funds with respect to my expectations and occasionally with respect to benchmark returns.
Will not work on Mac. Needs windows Excel with macros enabled. Let me know if you run into issues.
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