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Research Methodologies Fisdom Unveils a Game-Changing Approach to Mutual Fund Ratings

Fisdom Unveils a Game-Changing Approach to Mutual Fund Ratings

Written by - Fisdom Research

January 5, 2024 4 minutes

In the dynamic world of investments, staying ahead requires innovative tools and fresh perspectives. Fisdom proudly introduces its groundbreaking Mutual Fund Ratings, challenging the status quo and offering investors a unique lens to evaluate opportunities. Let’s explore what sets Fisdom’s ratings apart and why they should be a pivotal factor in your investment decisions.

1.   The Birth of Fisdom Ratings

In a landscape where mutual fund ratings are readily available from various sources, what motivated the Fisdom team to embark on developing their own ratings system? The answer lies in the quest for a methodology that stands independently on its merit. Rather than engaging in direct comparisons with other research firms, Fisdom’s approach is rooted in uniqueness and comprehensiveness.

2. Unpacking Fisdom’s Distinct Approach

Fisdom’s ratings are underpinned by three pillars – Consistency, Sustainability, and Risk-adjusted performance. Here’s why Fisdom’s methodology stands out:

Contextualizing Performance: Fisdom goes beyond historical returns, considering a fund’s performance in the context of market cycles, risk levels, and comparisons with peer funds. This approach provides a more accurate and nuanced evaluation.

What’s Inside Matters: Fisdom places incremental emphasis on portfolio construction and fund management style recognizing that a fund’s holdings and management approach significantly impact performance, this aspect adds depth to the evaluation.

Playing the Player:  Fisdom’s approach includes a robust evaluation of fund managers. Scoring criteria assesses the expertise and effectiveness of the fund management team, acknowledging their pivotal role in delivering consistent results and managing risks effectively.

Higher Highs, Lower Lows: Evaluation is based on a fund’s overall returns and its ability to generate excess returns during market upticks while protecting investors’ capital during market downturns. This balanced view provides insights into a fund’s performance across various market conditions.

Qualitative Overlay: Fisdom Ratings incorporate a qualitative assessment of various aspects, including the fund management team’s capabilities, the strength of their research infrastructure, the effectiveness of their risk management frameworks, and adherence to industry best practices. This qualitative overlay ensures a holistic view of a fund’s performance.

Wide Coverage:Fisdom strives to include a wide range of mutual funds under its coverage without imposing complex filters for evaluation. This inclusive approach allows for the assessment of diverse funds, catering to various investment objectives and risk tolerances.

Fisdom mutual fund rating methodology takes into account both quantitative and qualitative factors to arrive at the ratings. While quantitative parameters go deep into Performance profiles, risk profile ratios like Sortino ratio, and Treynor’s Ratio and  delve into fund management profiles, qualitative parameters like fund management team, internal processes, and parentage of the fund are given equal importance to make the ratings well rounded. Moreover, rating parameters considered vary according to the category of the mutual fund so that the right factors get captured into the final ratings.

3. Trust in Fisdom’s Ratings

Investors seeking confidence in their decisions can find assurance in Fisdom’s ratings for several reasons:

Independent Verification: Fisdom’s ratings have undergone independent verification by a senior academician at West Virginia University, USA. This external validation adds a layer of credibility and trustworthiness to the methodology.

Proven Results Over Three Years: Fisdom’s ratings have a track record of consistent and exceptional results over two decades. They have effectively navigated credit crises, preserving capital and delivering consistent equity performance.

Real-World Examples: Tangible examples highlight how Fisdom’s ratings have positively impacted investor outcomes over market cycles, showcasing their practical utility in navigating challenging market conditions.

Commitment to Transparency: Fisdom’s commitment to transparency in its methodology and data sources reinforces the integrity of its research process, providing investors with confidence in the accuracy and reliability of the ratings.

In conclusion, Fisdom’s Mutual Fund Ratings represent a paradigm shift in how investors can evaluate and navigate the complex world of mutual funds. The commitment to transparency, proven results, and a unique methodology position Fisdom Ratings as a reliable and insightful tool for making informed investment decisions. Embrace the future of investment analysis with Fisdom.

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