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Fund Research & Due Diligence

Objective analytical frameworks, quantitative risk ratios, investment style classification, and fundamental due diligence methodology.

Analytical Standard

The 6-Point Fund Evaluation Framework

A rigorous methodology designed to analyze equity schemes beyond superficial short-term figures.

1. Mandate Clarity

Determining if the scheme stays true to its stated market capitalization and sector constraints during varying market phases.

2. Rolling Consistency

Evaluating 3-year and 5-year rolling returns across multiple market cycles to assess consistency over point-to-point data.

3. Downside Capture

Measuring how well the portfolio protects capital when the benchmark index undergoes corrective pullbacks.

4. Cost Efficiency

Assessing Total Expense Ratios (TER) relative to category averages to avoid excessive ongoing management drag.

5. Manager Track Record

Examining the fund manager’s historical tenure, investment philosophy continuity, and decision-making framework.

6. Concentration Control

Reviewing weight distribution in top 10 stocks and top 3 sectors to avoid excessive concentration risk.

Financial metrics analysis
Quantitative Ratios

Essential Risk & Volatility Metrics

Understanding quantitative statistical ratios enables investors to analyze the risk taken to generate portfolio returns.

Standard Deviation

Quantifies total volatility and dispersion of returns around the fund's historical mean.

Beta Coefficient

Measures systematic sensitivity relative to the underlying benchmark index.

Sharpe Ratio

Evaluates risk-adjusted excess returns over the risk-free rate per unit of total risk.

Alpha Measure

Indicates excess return generated above the expected benchmark return predicted by Beta.

Style Classification

Investment Style Matrix

Equity fund managers operate through distinctive stylistic lenses. Combining styles creates a more resilient overall portfolio.

Growth Style

Growth Investing

Allocates toward enterprises exhibiting above-average revenue, earnings, and cash flow expansion. These companies reinvest profits into business expansion rather than paying high dividend yields.

Momentum & Scalability
Value Style

Value Investing

Identifies fundamentally sound companies trading at discounts relative to book value, earnings, or cash flows. Offers potential margin of safety and often features steady dividend income.

Valuation Discount
Blend / Core

Blend Investing (GARP)

Growth at a Reasonable Price (GARP) combines elements of both philosophies, seeking businesses with durable competitive advantages without overpaying for projected growth.

Balanced Approach
Knowledge Base

Key Investment Terminology

Clear explanations of core financial terms encountered in fund research documentation and factsheets.

Net Asset Value (NAV)

The per-unit market value of all underlying securities minus fund liabilities, calculated at the close of every trading day.

Total Expense Ratio (TER)

The annual percentage of fund assets dedicated toward management fees, administrative expenses, and operational overhead.

Portfolio Turnover Ratio

The rate at which a fund buys and sells underlying portfolio holdings over a 12-month period, reflecting holding conviction.

Benchmark Index

A standard market index against which a fund's risk metrics, sector allocation, and investment results are measured.

Maximum Drawdown

The observed peak-to-trough percentage drop in fund value before a new peak is attained during a specific timeframe.

Style Drift

When a fund diverges from its stated investment objective or market capitalization boundaries in pursuit of interim returns.

Quality Check

Fund Research Due Diligence Checklist

Execute these structured validation steps when reviewing fund factsheets and quarterly disclosures.

Compare 3, 5, and 7-year rolling return trends against the benchmark
Consistency
Verify that Beta is aligned with personal volatility comfort
Beta
Review Sharpe ratio to evaluate risk-adjusted return efficiency
Sharpe
Examine whether top 5 sector allocations exceed 60% concentration
Sector Risk
Confirm fund house governance standards and scheme assets under management (AUM)
Governance