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Comparing Mutual Fund Schemes
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How to compare two schemes as to which is better?
Which amongst these two are better? DSPBR Tax Saver Fund or Franklin India Taxshield Fund?
To compare two schemes, we can use the Fund Compare tool at https://www.valueresearchonline.com/funds/h2_fund_compare.asp
Add the two schemes and click Funds Compare.
Then use the various criteria to determine which is the best:
1. Rating (5 star is best)
2. Launch Date (older experienced funds are better)
3. Expense Ratio (Less expense ratio is better)
4. 1/3/5 year returns
5. Rank
6. Asset Size
There are various other parameters but they are too technical or might confuse. In most cases these criteria is sufficient to shortlist.
So amongst DSPBR Tax Saver Fund or Franklin India Taxshield Fund, i prefer the DSPBR Tax Saver Fund over the other.
Using Portfolio Overlap Tool
If you are investing in several mutual fund schemes, it will be wise and interesting to compare the underlying securities or companies in which the scheme is investing.
In particular, we will be interested to see how much overlap does two schemes have.
We wish to invest into two schemes such that there will be as less diversification as possible.
The MF Portfolio Overlap comparison tool is a useful tool to do this comparison.
Whenever you get time, say once a month, use the tool to see if the overlap between two schemes is increasing or decreasing.
In general, look for schemes whose overlap is as less as possible.
Something like 5% to 10% is normal. 15% is a little too much. Anything more than 20% is a lot and you might have to consider a corrective action.
Related Topics
- Understanding Mutual Fund Factsheet
- Evaluating of Mutual Fund Schemes
- Mutual Fund performance measurement with CAGR
- Mutual Fund performance measurement with Standard Deviation
- Mutual Fund performance measurement with Sharpe Ratio
- Mutual Fund performance measurement with Beta
- Mutual Fund performance measurement with XIRR