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MoneyWorks4Me Method to Rate and Rank Mutual Funds for SIP


MoneyWorks4Me rating and fund rankings for SIP are available to subscribers only. Moneyworks4Me is not a rating and ranking agency, but users should have a way to select funds and build a portfolio. The method used by it is described below to allow users to understand the logic behind the rating and ranking. The subscriber will find more details on this subject in the various contents made available from time to time. If you need more, email besafe@moneyworks4Me.com

MoneyWorks4Me evaluates and ranks mutual funds based on the following data-driven system:

  1. Consistency of performance: This is a measure based on whether the fund has consistently beaten the benchmark index. To do this, we compare the rolling returns over 3 years of the fund with the benchmark index over a minimum of 5 years and preferably 10 years. The rollover period is one month and the holding period is 3 years. Funds are colored green in terms of performance when the fund beats the benchmark more than 90% of the time. He is Orange if he bats 80-90% of the time and Red if he bats less than 80%. Funds with data for less than 5 years are colored gray.
  2. Quality of portfolio holding: Moneyworks4Me offers green, orange and red colored stocks based on whether the company’s performance has generated ROCE above a threshold (cost of capital) over 10 years (minimum 6 years) and generated positive free cash flow. For banks, it checks if the ROE is above 15% and if sales have increased compared to the previous year. Actions that perform consistently on these combined measures are color coded green (minimum score of 14 out of 20), orange (between 8 and 14), and red (less than 8 out of 20).
  3. Funds are colored green provided the portfolio holds 70% green stocks but no more than 20% red stocks. Funds with more than 20% red stocks in the portfolio are colored red. The rest are Orange funds

Ranking of funds in filters: Consistency and quality of performance are two parameters used to rank funds for SIP. The classification is as follows: GG, GO, GR, OG, OO, OR, RG, RO and RR.

With the same color-coded funds, the one with the highest 3-year rolling average returns (over 5-10 years), the number that appears in the Performance label, ranks higher.

Here is the summary :

The third Upside Potential tag is not relevant for SIP. It is relevant for lump sum investments in mutual funds.

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