IME Mutual Fund Selection Methodology

IME

| Written by IME's Investor Desk on 06-Oct-20

Our fund selection methodology is driven by the fund-selection best-practices followed by top international institutional investor's and wealth managers. This is based on the extensive experience our founder, Ashi Anand, has in dealing with these entities in his 18+ years of fund management experience (across both domestic & international funds).

Our fund selection methodology differs from typical fund rating that relies extensively on historical returns (that may/may not be replicated in the future), and focuses instead on:

The quality of the AMC: and their expertise in specific investment categories
The quality of the Fund Manager: their experience & the relevance of this experience at a fund level
The quality of the Fund: in terms of it's objective, track record and portfolio composition

Our focus is on identifying the most suitable funds that manage money in a manner consistent with their Investment Objectives & risk-adjusted LT Returns and are not focused on short-term performance or promises of finding the fund with the best-returns.

3-Stage Fund Selection Methodolgy

1) AMC Quality

Is the AMC too small?: this can lead to issues around attracting & retaining top quality fund managers, smaller research teams, limited access to quality research & company managements and concerns on longer-term sustainability
Pedigree & ownership: to understand the firm's DNA, investment philosophies, longer-term sustenance and the risk of ownership changes
Strengths & Weaknesses: every AMC has their own areas of strengths & weaknesses. This could be at an asset class level (debt vs. equity), category level (large-cap vs. small cap) or even at a fund level.

We are highly selective on the AMC's that we recommend, and accordingly only recommend funds from 8 MFs (vs 43 total).

2) Fund Manager Quality & Suitability

Fund Manager Experience: the number of years of experience and it's relevance for the fund category (a FM with extensive large-cap experience may not be suited for a mid-cap fund)
Fund Manager Focus: with FM's often managing multiple funds, is the specific fund a focus area for the fund manager
Fund Manager Track record: in terms of risk-adjusted returns and areas of focus

3) Fund Level Checks

Investment Objective: how clearly is it defined and is it being adhered to
Fund Performance: with a focus on longer-term risk-adjusted returns (vs. short-term performance)
Portfolio Composition: suitability of underlying investments for the fund's investment objective & any specific areas of risk (especially for debt funds)

5 Top-MF Schemes per MF Category For most MF Categories, we only recommend investments in the top-5 rated schemes on the basis of our rigorous fund selection methodology.

Highly Selective Fund Recommendations

Our rigorous & comprehensive analysis helps ensure that you only invest in top-quality funds that offer superior risk-adjusted returns that are suited to meet your investment goals.