Top 3 Mutual Fund Portfolios to Draw Long-Term Financial Goals

3. If your SIP investment is above Rs 10,000

Below are the following parameters on the basis of which short-listing for the mutual funds was made by ET:. 

1. Mean rolling returns rolled daily for the last 3 years 

2. Consistency for the last 3 years: They divided the period of last 3 years into smaller time periods; each with a progressing weighting.

3. Downside risk: Here, only the negative returns given by the mutual fund scheme has been considered for calculation. 

X =Returns below zero 

Y = Sum of all squares of X 

Z = Y/number of days taken for computing the ratio 

Downside risk = Square root of Z 

4. Outperformance: Measured by Jensen's Alpha or Jensen’s Performance Index for the last three years. Jensen' Alpha showed the risk-adjusted return produced by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). On the contrary to this, Higher Alpha suggests that the portfolio performance has surpassed the returns predicted by the market. 

Average return generated by the MF Scheme - [Risk Free Rate + Beta of the MF Scheme * {(Average return of the index - Risk Free Rate}] 

5. Asset Size: The threshold asset size is Rs.100 crore and threshold corpus taken is Rs.50 crore for equity diversified funds and for balanced funds, respectively.

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