Hundreds of fund houses, and thousands of mutual fund schemes, and yet, people think it's easy to choose the right scheme. Only Mutual Fund Distributors (MFDs) know that it’s not a walk in the park. Evaluating funds requires time, experience, and access to correct data. Thankfully, technology has made this task easier, and the best mutual fund software simplifies fund selection with features like Fund Rating.
What Is Fund Rating?
Fund Rating is like a grade for a mutual fund. It tells you how well a fund has performed as compared to others. It considers things like past performance, risk, and how consistent the fund has been. Higher ratings generally mean the fund has performed better.
Fund ratings are typically represented by stars or numerical values, helping MFDs identify high-performing funds with ease. This feature saves time, reduces manual effort, and ensures informed decision-making for MFDs and their clients.
How Does Mutual Fund Software Help with Fund Rating?
Technology provides reliable tools for fund evaluation, and mutual fund software for IFA and distributors makes the task less complex. It organizes the fund data into easy-to-view categories as mentioned below and offers precise metrics to support fund ratings.
1. Search Fund
This feature allows MFDs to search for mutual funds based on specific criteria like asset class, risk, returns, or AMC. Streamlining fund search eliminates the need to sift through countless schemes manually.
2. My Fund
This section focuses on funds already shortlisted or invested in by investors. This helps in understanding their rating.
3. Fund Manager Wise
This category shows how well funds managed by specific fund managers have performed. It helps MFDs see how trustworthy a fund manager’s strategies are, and whether investors want to continue investing in that fund or not.
Key Metrics for Fund Rating
A reliable wealth management software uses several metrics to provide accurate fund ratings. These metrics include:
1. Star Rating
● Star ratings are the most widely recognized method for evaluating mutual funds, where funds are rated on a scale of 1 to 5 stars.
○ 5-star funds: Have consistently outperformed their peers over specific timeframes (3, 5, or 10 years).
○ 1-star funds: Have generally underperformed their peers.
● Star ratings simplify fund comparison, making it easier for MFDs to select top-performing funds.
2. Performance Over Time
The software provides detailed percentage returns over different timeframes so you can decide better:
● 1 Week %: Return over the past week
● 1 Month %: Return over the past month
● 3 Month %: Return over the past three months
● 6 Month %: Return over the past six months
● 9 Month %: Return over the past nine months
● 1 Year %: Return over the past year
● 3 Year %: Annualized return over three years
● 5 Year %: Annualized return over five years
3. SI (Standard Deviation)
● This metric measures the risk or volatility associated with a fund’s returns.
● A lower standard deviation indicates more stable returns, while a higher value signifies higher risk.
● It’s a crucial factor for MFDs when recommending funds to risk-averse clients.
Benefits of Fund Rating for MFDs
Fund rating features in portfolio management software provide several benefits:
● Informed Decision-Making: Offers detailed insights into fund performance, helping MFDs make data-driven decisions.
● Time-Saving: Simplifies fund evaluation by categorizing and rating funds, reducing manual effort.
● Client Trust: Accurate fund recommendations enhance client trust and satisfaction.
● Portfolio Optimization: Helps MFDs create well-balanced portfolios by selecting high-performing funds.
● Transparency: Clear and concise metrics build transparency in fund selection.
Conclusion
The best software is a game-changer for MFDs. With features like Fund Rating, it simplifies the challenging task of evaluating and selecting mutual funds. By categorizing funds into Search Fund, My Fund, and Fund Manager Wise categories, and leveraging metrics like star ratings, performance percentages, and risk measures, the software empowers MFDs to make well-informed decisions quickly and efficiently.
