Mutual fund quartile ranking
Mutual fund quartile ranking is a valuable tool for investors looking to evaluate and compare the performance of different funds within the same category. This ranking system divides funds into four quartiles based on their historical returns, with top quartile mutual funds representing the highest-performing 25% of funds. By focusing on these top quartile funds, investors can identify those that have consistently delivered strong returns, helping to make more informed investment decisions for long-term wealth growth.
Know which funds are Underperforming in your portfolio for you.
Understanding Mutual Fund Quartile Ranking: A Simple Explanation
When evaluating mutual funds, it's essential to compare how they perform against their peers. One of the most effective tools for this is the Mutual fund quartile ranking system. In simple terms, this ranking divides funds into four groups, or quartiles, based on their performance over a specific period.
Here's how it works: funds are sorted by their returns, and then divided into four equal groups. The top 25% of funds with the highest returns are placed in the "Top Quartile." These are the best-performing funds in their category. The next 25% are classified as "Upper Middle Quartile," followed by the "Lower Middle Quartile," and finally, the "Bottom Quartile," which includes the 25% of funds with the lowest returns.
The Mutual fund quartile ranking is particularly useful for investors because it provides a quick snapshot of a fund's relative performance. If a fund consistently ranks in the top quartile, it indicates strong performance compared to its peers. On the other hand, a fund in the bottom quartile may be underperforming, which could be a red flag for investors. But what exactly does this ranking tell you? The quartile ranking meaning is straightforward: it shows where a fund stands compared to others in its category. The fund quartile meaning helps investors easily identify which funds are excelling and which ones are lagging.
Investors often look for top quartile mutual funds because they are considered to have consistently outperformed others. However, it's also important to consider the consistency of a fund's quartile ranking over time. A fund that regularly ranks in the top quartile is often seen as a reliable performer, making it a more attractive option for long-term investment. In summary, Mutual fund quartile ranking is a valuable tool for assessing the relative performance of mutual funds. By understanding this ranking system, investors can make more informed decisions and choose funds that align with their financial goals.
Parameters we consider in Mutual Fund Selection
Outperformance Consistency
We assess a fund's consistency by evaluating its chance of outperforming the index across multiple time frames.
5 Year Rolling Returns
We analyze the 5-year rolling returns to assess funds potential to outperform index. The 5-year returns are promising and provide clearer insights.
Rolling Sharpe Ratio
We prioritize the Sharpe ratio, developed by Nobel Prize winner William Sharpe. historically funds with higher Sharpe ratio tend to outperform index in the future.
Upside and Downside Ratio
We use Upside and downside parameters to enhance the accuracy of fund selection, helping to identify high-return, low-risk funds.
Mean and Standard Deviation
We use standard deviation to Refine our selection of low-risk funds after evaluating returns and risk with other parameters.
Focused Allocation
Our strategy emphasizes funds with a selective stock portfolio, keeping the selection between 25- 100 stocks to achieve superior index returns.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.