Mutual Fund Selection - Sharpe Ratio

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Sharpe Ratio

Sharpe ratio evaluates the performance of a portfolio based on the total risk of a portfolio. It measures the excess return generated by a portfolio over the risk free rate in relation to the total risk or standard deviation of a portfolio.

Sharpe Ratio= (Rp - Rf)/σ

Where, Rp=return on the portfolio, Rf= risk free rate and ?= standard deviation of the return of the portfolio

Higher the Sharpe ratio, better is the fund.

Illustration: Consider two funds A and B. Let return of fund A be 30% and that of fund B be 25%. On the outset, it appears that fund A has performed better than Fund B. Let us now incorporate the risk factor and find out the Sharpe ratios for the funds. Let risk of Fund A and Fund B be 11% and 5% respectively. This means that the standard deviation of returns - or the volatility of returns of Fund A is much higher than that of Fund B.

If risk free rate is assumed to be 8%,

Sharpe ratio for fund A= (30-8)/11=2% and

Sharpe ratio for fund B= (25-8)/5=3.4%

Higher the Sharpe Ratio, better is the fund on a risk adjusted return metric. Hence, our primary judgement based solely on returns was erroneous. Fund B provides better risk adjusted returns than Fund A and hence is the preferred investment. Producing healthy returns with low volatility is generally preferred by most investors to high returns with high volatility. Sharpe ratio is a good tool to use to determine a fund that is suitable to such investors.

 

 

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Best Performing Mutual Funds

1. Largecap Funds             Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Franklin India Bluechip
4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds         Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
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4. Birla Sun Life Front Line Equity Fund
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C. Mid and SmallCap Funds          Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
5. Birla Sun Life Dividend Yield Plus
6. SBI Emerging Businesses Fund
7. HDFC Mid-Cap Opportunities Fund
8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds   Invest Online

1. DSP BlackRock MicroCap Fund

2.       Franklin India Smaller Companies

E. Sector Funds          Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds      Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund

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Results analysis of your investment

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THE time of quarterly results are such that investors in equities need to pay attention to what is happening. There are several trends that might be visible but when it comes to the overall equity investments, the requirement of seeing the results and what they actually indicate is very important. This happens because the longterm performance of the stock of a company is dependent on the kind of results that are declared to a large extent, and this is one area that should receive the focus of investors. Here are a few things that everyone should look out for.

 

Overall growth:

The first thing that investors should look out for in the case of the quarterly results is whether the company is on the path of growth or not.

This would be visible in the form of the rise in the sales of the company as well as the rise in the net profits that are recorded at the end of the day. There has to be a trend whereby these are rising over a period of time, as this will indicate that there is some improvement that is being witnessed. However, this is not the end of the matter but rather it is the start because just ensuring overall growth will not lead to a situation where the company’s stock will perform. It also has to be seen in the context of the overall situation around in the sense that is the overall economy growing and what is the kind of growth that peers are witnessing in the same industry.

Beating competition:

If a company is witnessing an outperformance in the sales as well as profits then this is a good sign because investors would be willing to pay more to hold stock in the company. There could be some quarters when the position is weakened a bit due to the overall conditions but over a period of time there has to be an element of consistency in the company’s performance in the sense that this should be above the industry average and there should also be gain in market share. If this is done then there would be a favourable look at what the company is doing. The profitability is also a factor to be considered and hence a profit margin that is rising as well as higher than the other players in the market is something that would be desirable for the company.

Expectation:

 For long-term investors, the short-term movements in the stock price can seem to be a bit disturbing. This happens due to the fact that there are expectations that are often built into the stock price that shows large movements before the actual results come out. Then when they are released the entire game consists of looking at the expectation and then seeing whether this is better or not. This can lead to a situation where the behaviour in the short term cannot be easily explained so even when profits are way up the share could be falling.

Long-term investors need to look at the fact that there is a bigger picture that needs their attention, as the trend over the longer term in the share price will be reflective of the performance that the company is actually showing.

Hence, the focus has to be on the fact that the company is able to ensure that there is a constant improvement in the overall performance. This would ensure that the basis or the fundamentals for making the investment is sound.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

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Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

1. ICICI Prudential Tax Plan Invest Online
2. HDFC TaxSaver Invest Online
3. DSP BlackRock Tax Saver Fund Invest Online
4. Reliance Tax Saver (ELSS) Fund Invest Online
5. Birla Sun Life Tax Relief ‘96 Invest Online
6. IDFC Tax Advantage (ELSS) Fund Invest Online
7. SBI Magnum Tax Gain Scheme 1993 Invest Online
8. Sundaram Tax Saver Invest Online
9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Birla Sun Life Front Line Equity Fund
2. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
2. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
3. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
4. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
5. Tax Saver MutualFunds Invest Online
1. ICICI Prudential Tax Plan
2. HDFC Taxsaver
3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund
6. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund

Canara Robeco Short Term Fund Exit load

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Canara Robeco Mutual Fund changed the exit load of Canara Robeco Short Term Fund from the previous 0.5 per cent on redemptions within 3 months, to 0.5 per cent on redemptions within 6 months.

 

The change will be effective from October 28, 2013.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

1. ICICI Prudential Tax Plan Invest Online
2. HDFC TaxSaver Invest Online
3. DSP BlackRock Tax Saver Fund Invest Online
4. Reliance Tax Saver (ELSS) Fund Invest Online
5. Birla Sun Life Tax Relief ‘96 Invest Online
6. IDFC Tax Advantage (ELSS) Fund Invest Online
7. SBI Magnum Tax Gain Scheme 1993 Invest Online
8. Sundaram Tax Saver Invest Online
9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Birla Sun Life Front Line Equity Fund
2. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
2. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
3. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
4. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
5. Tax Saver MutualFunds Invest Online
1. ICICI Prudential Tax Plan
2. HDFC Taxsaver
3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund
6. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund

SBI Emerging Businesses Fund Invest Online

Invest In Tax Saving Mutual Funds Online

Download Tax Saving Mutual Fund Application Forms

Buy Gold Mutual Funds

Call 0 94 8300 8300 (India)

 

SBI Emerging Businesses   Invest Online

The top-performing mid-cap scheme of 2012, SBI Emerging Business has somewhat disappointed its investors so far in the current fiscal by under-performing both the category average and broader indices. Its year-to-date (YTD) returns stand at –16.1% against –8.6% average gains by the category of mid-cap schemes and Nifty’s 3.32% returns. But given its consistent long-term track record, its annualised weighted average return over the five-year period stands better than its peers. The scheme is currently overweight FMCG but underweight technology, which seem to have impacted its performance in the interim. But given the fund manager’s proven track record in managing this scheme, it is expected that the scheme will gear up its performance in the coming months.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

1. ICICI Prudential Tax Plan Invest Online
2. HDFC TaxSaver Invest Online
3. DSP BlackRock Tax Saver Fund Invest Online
4. Reliance Tax Saver (ELSS) Fund Invest Online
5. Birla Sun Life Tax Relief ‘96 Invest Online
6. IDFC Tax Advantage (ELSS) Fund Invest Online
7. SBI Magnum Tax Gain Scheme 1993 Invest Online
8. Sundaram Tax Saver Invest Online
9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Birla Sun Life Front Line Equity Fund
2. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
2. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
3. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
4. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
5. Tax Saver MutualFunds Invest Online
1. ICICI Prudential Tax Plan
2. HDFC Taxsaver
3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund
6. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund