STAR TRACK MUTUL FUND MF ratings methodology
Our rating is based on the funds’ historical performance measured both in terms of return and risk. The returns and risk of the schemes are measured using rolling returns and Sortino ratio respectively.
Rolling returns help to identify schemes that have delivered relatively consistent returns during various market cycles and over the long run. We
have considered one year, three year and five year rolling returns for a total of 7 year NAV history for equity and hybrid funds. For debt-oriented funds,
we have considered one year, two year and three year rolling returns for a total of 5 year NAV history.
Sortino ratio measures the performance of the schemes during downtrends, thus capturing the downside risk.
One year trailing return is also considered to assess the fund’s recent performance. To arrive at the final score, we have assigned a 60 per cent weight age for past performance based on rolling returns. Sortino ratio and one year performance is given a 30 per cent and 10 per cent weight age respectively. The final score is used to rate funds within each category. Mutual funds with corpus of less than ₹100 crore, liquid funds, and arbitrage funds, are not considered for rating.
We have also not rated categories where the number of funds are less than 5.
Post the SEBI’s directive on categorization and rationalisation of mutual fund schemes, there are 30 schemes that have undergone a drastic change in their portfolio and mandate. Given that comparing past performance of these schemes is not possible, we have excluded them from the rating exercise.
The funds with highest scores are assigned five star rating while the funds with lowest scores are assigned one star rating.