Value Research Names 10 Core Contenders in New Mutual Funds

Value Research has introduced a four-test framework to evaluate mutual funds with less than three years of history, identifying 10 funds as Core Contenders. Analysts developed this evaluation method to help investors assess newer schemes despite standard advice to prioritize long-term, tested funds.

The Four-Test Evaluation Framework

The evaluation process subjects eligible funds to a series of specific performance and consistency checks.

Here are the tests applied to the funds:

1. Benchmark Performance: Has the fund outperformed its benchmark since launch?

2. Consistency: How often has the fund’s one-year rolling return exceeded the benchmark?

3. Downside Protection: How did the fund perform during months when the benchmark fell?

4. Recent Performance: Have the last 12 months remained strong?

Screening Results and Portfolio Quality

Funds passing the initial hurdles undergo further scrutiny for portfolio quality. Stock ratings and quality scores ensure that returns stem from business fundamentals rather than speculation.

Here are the key numbers from the selection process:

1. 164 eligible funds evaluated.

2. 103 funds passed the initial tests.

3. 10 schemes selected as Core Contenders.

The selected Core Contenders are diversified enough to act as core portfolio holdings. Value Research notes these selections are not formal ratings but identifications of strong early performance.

Investors should continue monitoring these funds while adhering to the standard three-year rule for long-term investment decisions.