Comparing funds without being fooled

Two funds, a fact sheet each, and a table that makes the choice look obvious. Move the start date by four months and the ranking reverses. This course teaches you to compare funds on the questions a fact sheet is not designed to answer.

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Six things you will be able to do

Go past the returns table. Learn to ask the same question of both funds, over the same window, net of the same costs.

01 Read a fact sheet in orderWhich lines to open first, and why the number printed largest is the least useful one.
02 Fix the windowPoint to point returns move with the start date. Use rolling windows and the flattery disappears.
03 Check the benchmarkWhether the fund is being measured against something it actually resembles.
04 Separate skill from categoryHow much of the return came from the manager and how much from the category being in favour.
05 Cost the difference in rupeesExpense ratio, exit load and turnover, converted into money over your holding period.
06 Judge the downsideDrawdown, downside capture and the worst window, because an average return hides all three.

What changes after this course

You stop comparing two return figures and start comparing every window, against the same benchmark, net of the same costs.

Two funds compared across rolling windows rather than one flattering date

The benchmark and category checked, so the comparison is like for like

Cost and downside stated in rupees, not left as footnotes on page four

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