How many past years to consider for MF Selection

POSTED BY SIVA PRASAD RAVIRALA ON February 11, 2012 6:52 am COMMENTS (8)

Hi,

Iam confused in selection of MF. .
When searched in Value research online, rankings are different for different years.
For Example in Large Cap Category, the first ranks are as follows:
Frankline India Blue Chip for 10years, DSPBR Top 100 Equity for 7 & 5years, ICICI prudential Focused Blue chip for 3 & 1years.
What should be the bench mark? I mean, should we consider 10years performance or 7 or 5 or 3, to select Mutual Fund.
Request your help

Thank You

8 replies on this article “How many past years to consider for MF Selection”

  1. Dear Siva, No, you are not boring you. I’m answering on this forum from my own free will & to have a satisfaction that I’m able to help some people with whatever little help I may offer.

    As far as SD is concerned, yes VROL, considers it for ranking purpose. Still I w’d recommend, opt a fund which is consistent in it’s return & not the top class performers as toppers may change every now & then.

    Thanks

    Ashal

  2. Hi Ashal,

    I think consistency can be known by calculation of Standard Deviation.
    And again, do value research (or other sites) consider Standard Deviation for ranking?
    If so, what is the risk involved, if we invest based on 10years rankings?
    Sorry if I am boring you.

    Thank You
    R Siva Prasad

  3. Dear Siva, yes for the purpose of rankings, other parameters are also considered. Yes not all funds were around, 10Y before. Still we may (& we should) try to check a long term consistency track record.

    Please read again my above reply that I’m putting more weight on CONSISTENCY & not on top class performance.

    Thanks

    Ashal

  4. Dear Ashal,

    Thanks for advice.
    I think ranks are based not only on returns. They also consider risk involved and consistency. Correct me if Iam wrong, please.

    Anyway I get the answer i.e I have to consider 10 year rankings.
    But all Funds may not have started before 10years, though they are good funds.
    Thank you once more.

    R Siva Prasad

  5. Dear Siva, Instead of looking for ranking, please check the long term i.e. 10Y performance of funds. In this 10Y period, there may be at least 2 bull & 2 bear cycles & the fund has enough time & events to prove it’s worth. Please look for consistency in the performance.

    Here the standard disclaimer of each MFs come into picture that ” past performance is no guarantee of future performance.”

    Yes I do agree with dear Ramesh for that link posted in. In a sense rankings are useless but the human brain is tuned up like that only. For most of the time we only look for toppers & not the consistent performers.

    Thanks

    Ashal

  6. Hi Ramesh,

    Thanks for the article. Still to minimise risk and maximise return, ranking is the only available way to chose.
    How to chose MF, if we should not depend on Past performance.
    I think after considering all relevant points only, valueresearch online site is ranking the funds.

    Please advice.

    Thank You
    R Siva Prasad

  7. Hi

    My goals are longterm (morethan 10years)

    Thank You
    R Siva Prasad

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