Friday 5 October 2012

Two Year Performance Review

The performance in a two-year period is a very weak indicator of a fund’s quality or the effectiveness of a rating methodology. Still it gives a small hint about both.

In the two-year period from 02-Oct-2010 to 01-Oct-2012, Equity funds are down 3-4%, Equity-oriented Hybrid funds are flat or mildly positive, Sensex and Nifty are down 4%, Mid Cap Index is down 10% and Small Cap Index is down 17%.

Compared to them, the 2* - 5* funds are down 1-2% and the 1* funds are down a bit more than 4%. I guess the aim of avoiding extremely volatile funds is on track. Rest of it looks purely random, like it did one year ago.

Groups 5-star 4-star 3-star 2-star 1-star
Returns -1.39  -1.11  -2.10  -1.02  -4.26

PS: The apparently consistent good performance of 2* funds could be due to their average-tracking nature i.e. these funds should not be recovering so well when the market is on an upside move. But we need to wait for this to be proved.

One Year Performance (Class of October 2011)

In the one-year period from 02-Oct-2011 to 01-Oct-2012, Equity funds are up 14-16%, Equity-oriented Hybrid funds are up 14%, Sensex and Nifty are up 15%, Mid Cap Index is up 9% and Small Cap Index is up 3%.

Compared to them, the rated funds are also up in the narrow 14%-16% range though the performance of 4* and 5* funds is a bit better. So, no obvious conclusions yet.

Groups 5-star 4-star 3-star 2-star 1-star
Returns 15.58  15.61  14.42  14.71  14.95

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