Update: Mutual Fund Risk and Return Analyzer

Published: April 18, 2015 at 9:38 am

Last Updated on

This is an update to the mutual fund risk and return analyzer which helps you gauge performance of equity mutual funds on risk-adjusted basis for investment durations ranging from the past 1 year to the past 9 years.

Nithin and Nilesh Patel pointed out that the sheet gave an error. Thanks to them, I found that the error was because of the BSE server urls. They had changed the format for some indices. This is a major disappointment as we could easily retrieve the data in the old format. Members of FB group, Asan Ideas for Wealth also helped in testing it and confirming the error.

Therefore, I had to remove the BSE server dependence and work with Yahoo finance plus index history stored in the sheet.  If you can help retrieve data from the present format of the BSE server, please let me know.

Table of Contents

How to use this analyzer

  1. Choose the fund category.
  2. List all funds in that category at Value Research Online.
  3. Spot the funds which have been in the top 10 in terms of returns over the past 3, 5 and 10 years (3,5 alone should also do).
  4. Create a shortlist based on the above criterion. About 5 funds, not more.
  5. Analyze the funds with this sheet and look for consistent risk-return score and consistent downside protection and invest in one of them.
  6. This will take you about 30 minutes or so.

Features of the risk and return analyzer

For equity mutual funds, you can

  • Determine SIP and lump sum returns for investment duration up to 9 years (updated from 8)
  • Evaluate performance taking into account the risk taken for the return achieved (13 metrics are computed. See list here). A percentage score is assigned to the fund for each investment duration based on values of the 13 different risk/return metrics.
  • Compare
    • Fund versus benchmark (Nifty, CNX 100, CNX Mid Cap, CNX 500, Sensex, BSE Small Cap, Mid Cap, BSE 100,200, 50)
    • Fund and benchmark performance wrt a risk–free rate that you choose for each investment duration
    • Fund and benchmark performance wrt a minimum acceptable rate that you choose for each investment duration

This analyzer can be used by ALL retail investors. NO knowledge of risk and return analysis is required to use the sheet and understand the results!

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Here is how Quantum Long Term equity fared.

quantum-long-term-equity-2

 

No alarming drop in performance. Cash in the portfolio or no cash in the portfolio, I see no reason to exit my QLTE holdings. As Ashal Jauhari put it, ‘I am in my comfort zone when it comes to QLTE’.

I will post more such risk-return graphs in a second post.

Download the updated mutual fund risk and return analyzer

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About the Author

M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Linkedin
Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. For speaking engagements write to pattu [at] freefincal [dot] com

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7 Comments

  1. Dear pattu sir,

    thank you for this analyzer sheet. it works great. checked for franklin india prima plus. satisfied with this risk return score >=90%
    But I can’t find UTI equity fund regular growth option fund, only dividend option is available from the drop down menu. Also how do i do for HDFC balanced fund, its benchmark is crisil balanced, which also not available in the benchmark list drop down menu.

    one basic question, who decides the benchmark of a fund? is there a regulatory authority on that? what if the benchmark itself is lousy?

    should i compare different benchmarks and then choose fund with a better benchmark?

  2. Dear pattu sir,

    thank you for this analyzer sheet. it works great. checked for franklin india prima plus. satisfied with this risk return score >=90%
    But I can’t find UTI equity fund regular growth option fund, only dividend option is available from the drop down menu. Also how do i do for HDFC balanced fund, its benchmark is crisil balanced, which also not available in the benchmark list drop down menu.

    one basic question, who decides the benchmark of a fund? is there a regulatory authority on that? what if the benchmark itself is lousy?

    should i compare different benchmarks and then choose fund with a better benchmark?

  3. Hi.

    I need to use CNX200 as a benchmark for some funds.
    For eg. VRonline has used CNX200 for Kotak Select Focus growth.

    Can you add this benchmark to your excel ? If not, which benchmark from the available list do you recommend that will be the closest to CNX 200 ?

    On another note, who is the competent authority that decides the appropriate benchmark index for a fund ?

    Thanks.

  4. Hi.

    I need to use CNX200 as a benchmark for some funds.
    For eg. VRonline has used CNX200 for Kotak Select Focus growth.

    Can you add this benchmark to your excel ? If not, which benchmark from the available list do you recommend that will be the closest to CNX 200 ?

    On another note, who is the competent authority that decides the appropriate benchmark index for a fund ?

    Thanks.

  5. I’m getting “No connectivity with the server…..The server couldn’t be contacted” error for benchmark data. Fund data downloads fine.

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