Mutual Fund Comparison Tool | INDmoney

Question 1

How do you evaluate a mutual fund?

Accepted Answer

Returns: The most common method to compare mutual funds is just by looking at their respective returns. We have provided both the short-term and the long-term returns for each of the funds. Although, for equity funds comparing returns across the long-term (3 years, 5 years) is generally preferred.
Lumpsum return Vs SIP return: Apart from the time period, comparing returns on the basis of the method of investment is also important. Lumpsum return is calculated by comparing the annualized return of the funds whereas the SIP rate of return is calculated by comparing the extended internal rate of return (XIRR).
Expense Ratio: The expense ratio is another key metric that shows the amount of annual expense that an investor of a particular fund shall incur. The fund charges this amount from the investors in order to manage the fund on their behalf.
Risk Ratios: The returns of a fund alone do not give the entire picture, returns must always be compared with the risks undertaken on investing in a fund. We have explained the various ratios in the below FAQ.
Portfolio Holdings: Investors must be aware of a fund’s portfolio prior to investing in them. A fund’s portfolio tells us the exposure of the fund across various sectors, which are the key stocks that form a majority of the fund’s holding as well as the degree of overlap that exists in case you own more than one fund at a time.

Question 2

Why do we need to compare mutual funds?

Accepted Answer

Investments being a long-term affair, selecting the right type of mutual fund is imperative. Among the broadly classified types of mutual funds like equity, debt, and hybrid, there are various subcategories that increase the number of choices for investors. Hence comparing mutual funds is the first and most important step in selecting the right investment.

Question 3

Which are the important risk measurement ratios used to compare mutual funds?

Accepted Answer

There are various risk measurement ratios that help us to compare the performance of various mutual funds.

Alpha: The alpha of a mutual fund describes the fund’s performance in relation to a particular benchmark index it is pegged at. The baseline for alpha is 0. A mutual fund with a baseline above 0 means that the particular fund has outperformed the benchmark. While the same below 0 shows that the fund has underperformed compared to the benchmark index. A fund with 0 alpha means it is performing in line with the benchmark.
Beta: The beta shows how volatile a fund is compared to the benchmark index. The baseline for Beta is 1 and funds with higher volatility have a beta higher than 1. While the same less than 1 implies less volatility compared to the benchmark index.
Sharpe Ratio: The Sharpe ratio represents the risk-adjusted rate of return for a particular fund. In other words, the Sharpe ratio tells us the ideal return that the fund must generate in relation to the overall risk taken on investing in that fund. A fund with a higher Sharpe ratio is considered better than the one with a lower Sharpe ratio. A negative Sharpe ratio implies that investments that are risk-free have a higher return than the particular fund.
Price-to-earnings: The price-to-earnings ratio of a mutual fund is the weighted average price-to-earnings ratio of all the stocks that form part of a fund’s portfolio. Price-to-earnings represents the amount of money that investors are willing to invest in compared to the earnings of a particular company or a mutual fund. This is used to evaluate if a fund is highly overpriced or underpriced compared to other funds.
Price-to-book ratio: The price-to-book ratio of a mutual fund is the weighted average of the price-to-book ratios of all the stocks that form part of a fund’s portfolio. The price-to-book ratio compares the market price of a stock to the current book value of all assets held by the company. The P/B ratio of a mutual fund depends on the P/B ratio of the stocks that have a higher holding in the fund’s portfolio.
Modified Duration: Duration is for debt funds what beta and alpha are for equity funds. Duration represents the sensitivity of a debt mutual fund in relation to changes in interest rates. If a particular fund has a modified duration of 3 years it means a 1% rise in interest rates shall affect a 3% fall in the price of the debt fund and vice versa.
YTM: Yield to maturity of a debt fund gives the expected return of a fund if held till maturity. The YTM of an open-ended fund could be different from the actual return of the fund as there is a constant inflow and outflow of funds in an open-ended fund.
Info Ratio: The information ratio of a fund conveys the degree of excess returns that is generated by a fund for risks incurred by the investor relative to the benchmark index. It essentially shows the consistency of a particular fund manager over a period of time. If the info ratio is less than 0.4, it means that the fund manager has not been so consistent in giving excess returns relative to the benchmark index. An info ratio which is between 0.4 and 0.61 is considered good while an info ratio between 0.61 to 1 is believed to be excellent.
Standard Deviation:The standard deviation explains the volatility of the fund through which we can assess the risk of the fund. The higher the standard deviation, the higher is the risk of the fund and vice versa.

Question 4

How do you evaluate a mutual fund?

Accepted Answer

You can compare mutual funds by clicking on the MF compare option on the Mutual Funds Explore page or on the individual fund details page. You land on the MF Compare page where you can add or delete other mutual funds. You can compare upto four mutual funds at a time.

Pros	3Y returns in the top 25% of the category. Beats FD returns for both 3Y & 5Y.	Lower volatility within category. Protects capital during bear phase. Larger AUM within category.
Cons	Smaller AUM within category.	Has not generated consistent returns. Does not beat the benchmark consistently. Higher probablity of downside risk.

INDMoney rank	8/23	20/23
Category	Equity, Small-Cap	Equity, Small-Cap
Fund Age	12 Years 4 Months	13 Years 9 Months
Fund AUM	₹2402 Cr	₹39955 Cr
Min Investment	SIP ₹500 Lumpsum ₹1000	SIP ₹500 Lumpsum ₹5000
Expense Ratio	0.79%	0.74%
Exit Load	1%	1%
Benchmark Index	S&P BSE 250 SmallCap Index TR INR	BSE 250 SmallCap TR INR

No of Holdings	80	73
Top 5 Holdings	Navin Fluorine International Ltd(3.75%) GE Vernova T&D India Ltd(3.72%) Kirloskar Oil Engines Ltd(3.54%) Gabriel India Ltd(3.39%) Karur Vysya Bank Ltd(3.36%)	Ather Energy Ltd(4.26%) Navin Fluorine International Ltd(3.09%) Honeywell Automation India Ltd(2.85%) City Union Bank Ltd(2.71%) Belrise Industries Ltd(2.58%)
No of Sectors	10	11
Top 3 Sectors	Industrial(27.37%) Financial Services(20.4%) Consumer Cyclical(17.57%)	Consumer Cyclical(28.61%) Industrial(23.11%) Financial Services(17.41%)
Equity %	99.04%	89.92%
Debt %	-	0.16%
P/E	33.43	23.29
P/B	5.86	4.06
Credit Quality	-	-
Modified Duration	-	-
YTM	-	-

1-Month Return	6.19%	2.63%
3-Month Return	15.74%	14.1%
6-Month Return	21.61%	13.92%
1-Year Return	25.19%	8.88%
3-Year Return	20.26%	13.8%
5-Year Return	18.88%	15.84%

Sharpe	0.67	0.38
Alpha	2.97	-1.32
Beta	0.85	0.76
Standard Deviation	19.55	17.15
Information Ratio	0.25	-0.48

Compare Mutual Funds

Union Small Cap Fund

SBI Small Cap Fund

Historical Returns Chart

Pros and Cons Compared

Fund Overview Comparison

Portfolio Holdings Compared

Mutual Funds Returns Comparison

Mutual Funds Ratios Comparison

About the Fund

Description	Union Small Cap Fund is an equity fund.The fund could potentially beat inflation in the long-run.	SBI Small Cap Fund is an equity fund.The fund could potentially beat inflation in the long-run.
Managers	Pratik Dharmshi, Gaurav Chopra	R. Srinivasan