Morningstar conducted a study to ascertain the performance of analyst rated funds across geographies like United States, Australia, Canada, Europe, Middle East, Africa, and India.
The performance of Indian Analyst rated funds was covered over 12-month, 36-month and 60-month period from 2011 to 2020. Only open-end share classes were included. Alpha was measured against the category average return. The results show that gold, silver and bronze rated funds have outperformed their category average while negative rated funds have underperformed.
Before we get into how these funds have performed, let us understand The Morningstar Analyst Rating.
The Morningstar Analyst Rating for funds is the summary expression of our forward-looking analysis of a fund. Morningstar Analyst Ratings are assigned globally on a five-tier scale running from Gold to Negative.
The top three ratings, Gold, Silver and Bronze, all indicate that our analysts think highly of a fund; the difference between them corresponds to differences in the level of analyst conviction in a fund’s ability to outperform its benchmark and peers over the long term, meaning a period of at least five years, within the context of the level of risk taken. The Analyst Rating does not express a view on a given asset class or peer group; rather, it seeks to evaluate each fund within the context of its objective, an appropriate benchmark, and peer group.
Here is how Indian analyst rated funds have performed.
OVERALL (equity and fixed income)
Alpha 36M Rolling Window
- Gold: Outperformed category average by 0.58%.
- Silver: Outperformed category average by 0.79%.
- Bronze: Outperformed category average by 0.03%.
- Neutral: Underperformed category average by – 0.20%.
- Negative: Underperformed category average by – 1.69%.
Alpha 60M Rolling Window
- Gold: Outperformed category average by 1.38%.
- Silver: Outperformed category average by 1.18%.
- Bronze: Outperformed category average by 0.29%.
- Neutral: Underperformed category average by – 0.13%.
- Negative: Underperformed category average by – 1.42%.
EQUITY FUNDS
Alpha 36M Rolling Window
- Gold: Outperformed category average by 0.21%.
- Silver: Outperformed category average by 1.12%.
- Bronze: Underperformed category average by – 0.70%.
- Neutral: Underperformed category average by -0.21%.
- Negative: Underperformed category average by – 4.13%.
Alpha 60M Rolling Window
- Gold: Outperformed category average by 1.30%.
- Silver: Outperformed category average by 1.88%.
- Bronze: Outperformed category average by 0.13%.
- Neutral: Outperformed category average by 0.03%.
- Negative: Underperformed category average by – 3.78%.
FIXED INCOME FUNDS
Alpha 36M Rolling Window
- Gold: Outperformed category average by 1.77%.
- Silver: Outperformed category average by 0.61%.
- Bronze: Outperformed category average by 0.42%.
- Neutral: Underperformed category average by – 0.18%.
- Negative: Underperformed category average by – 0.63%.
Alpha 60M Rolling Window
- Gold: Outperformed category average by 1.67%.
- Silver: Outperformed category average by 0.69%.
- Bronze: Outperformed category average by 0.44%.
- Neutral: Underperformed category average by – 0.22%.
- Negative: Underperformed category average by – 0.40%.
Take a look at the funds covered by our analysts in India here.
