assessing funds to derive the list of Recommended Funds, we have looked
at past performance, expense ratios and resilience of the funds. (Click
here for more details on the methodology)
past performance of the mutual funds schemes takes up a large part of
our consideration. Although the past performance is not indicative of
future performance, we believe that past performance can still give us
an indication of the quality of the fund management team. We look
specifically at cumulative performance over various time horizons (from
one-year to five-year periods) and the returns as per calendar
year, to rank these funds.
Recommended Funds for Equity Funds
the equity segment, most of the changes in recommended funds were on
account of funds being recommended for some new categories /
classifications, or on account of new funds being added on to our
platform (from the last review period).
new sector categories that we added in the recommended funds include
Pharmaceuticals, Technology and FMCG (Fast Moving Consumer Goods) as
these sectors have performed well in the first half of 2010.
categories like Mid and Small-caps and ELSS (Equity Linked Savings
Schemes), the changes in recommended funds were primarily due to
addition of new funds on to our platform (from the last review period).
for Bond and Hybrid Funds
changes in recommended funds from the bond and hybrid segment were a
mixed bag. Some changes were due to addition of new funds on to the
platform (from the last review period). And some were due to a slight
downgrade of earlier recommended funds.
some categories like Ultra Short-Term and Monthly Income Plan, the
changes were primarily due to addition of new funds on to our platform.
In the Ultra Short-Term category, both the recommended funds viz. LICMF
INCOME PLUS FUND- GROWTH and RELIANCE MONEY MANAGER FUND- GROWTH,
were added on to our platform after the last review. From the Monthly
Income category, HDFC MULTIPLE
YIELD FUND PLAN 2005- GROWTH was
added on to our platform after the last review.
for certain categories, the changes in recommended funds were due to a
downgrade of earlier funds in this review. In the Debt-Income category,
ICICI PRUDENTIAL LONG
TERM PLAN- CUMULATIVE was
excluded from our recommended funds list as the overall rank of the
fund (within its peer category) fell sharply from the first place (as
at December 2009) to the eighteenth spot (as at June 2010). The huge
fall in overall ranking of the fund could primarily be attributed to
the sharp rise in the expense ratio of the fund.
the Debt-Short Term category, JM
SHORT TERM FUND- GROWTH, was
excluded from our recommended funds list, as the overall rank of the
fund fell slightly from the second place (as at December 2009) to the
fourth spot (as at June 2010).
the Monthly Income Plan (MIP) category, UTI
MONTHLY INCOME SCHEME-GROWTH
was excluded from our recommended funds list, as the overall rank of
the fund fell from the first place (as at December 2009) to the sixth
spot (as at June 2010). Meanwhile, the overall rank of our new
recommended fund in the MIP category viz. RELIANCE
MONTHLY INCOME PLAN- GROWTHclimbed
up from the seventh rank (as at December 2009) to the second rank (as
at June 2010).
Recommended Funds Have Not Gone Bad
usually recommend funds that have the highest overall rank within their
respective fund category / classification, unless they don’t
have the requisite track record. So it may happen that a previously
recommended fund no longer appears amongst the top ranked funds (within
that category) for the relevant review period. Our observation has been
that most of the previously recommended funds that have been replaced,
have not performed poorly, but have dropped by a mere one or two ranks
(overall rank), as a result of which they have been replaced.
The high turnover in the recommended funds list is primarily on account
of funds being recommended for some new categories / classifications,
or on account of new funds being added on to our platform (from the
last review period).