Start researching mutual funds with AMC dossiers

Start researching mutual funds with AMC dossiers

Some believe selecting mutual funds is easy. Just look at the short and long-term ‘track record’, perhaps relative to the relevant index and peers. Others use ‘risk-adjusted performance’ instead, which in practical terms means using a ratio like Sharpe Ratio, Information Ratio or Sortino Ratio. The sophisticated add some qualitative analysis on people, process and business management. That’s about it…how hard could it be?

In reality, fund selection is much harder. 

As we have pointed out in the past, good mutual fund research is hard to find. If it were that easy, the whole world would simply use Morningstar star ratings, or combine them with their analyst ratings. But there is a whole industry of investment consulting firms that advise institutional investors like pension funds, endowments, sovereign funds etc. Even high net worth investors rely on the research provided by private banks, and sometimes by investment banks. The reasons are manifold – the information needed is hard to collate, the researchers need to be skilled themselves and as is often the case, the incentives need to be aligned.

At Money Management India, we want to be part of the solution. We may not be able to solve all the issues but we will try.

We are starting with the collation of the information needed.

Information needed to research mutual funds

As we mentioned before, each investor may look at different information. At least, they might interpret it differently. The raw information that most investors look at includes –

  • Performance and portfolio – called quantitative information
  • People, process & business – called qualitative information
  • Due diligence – checks to ensure the qualitative and quantitative information is accurate

Investors then ‘analyse’ this information based on their own skillset. The ‘analysis’ is basically how they process the raw information and conclude whether to invest or not.

We have decided to ‘deconstruct’ the research process of making the information and analysis modular. We are pleased to present the following modules – 

  • Dossier – simple summary of publicly available information
  • Interview – video interviews with CEO and CIO
  • Analysis – analysis of charts of quantitative information (performance and portfolio over time)

MMI dossiers on AMCs – first draft available now

A dossier is a collection of papers or other sources, containing detailed information about a particular person or subject.

Hence, the MMI dossiers will include – 

  • About – A paragraph about when the company started, who it’s owned by, and something about the parent company/companies to show the expertise and seriousness the parent companies are about the asset management business.  A line about the size including assets under management, number of offices and staff/investors to show how committed and successful the firm has been. Where available, the income and profit figures from the financial statements.
  • Key staff – A list of 2 to 4 people with one para each about their years of experience and qualifications.
  • Investment philosophy – Ideally, a short paragraph verbatim in “ “. If we don’t find anything on the website, we say so. Then, we try to put in what we could glean from interviews, saying ‘The following information was taken from this interview.’
  • Media – A  list of the media articles and video interviews that add value in terms of understanding the firm (CEO talking about business strategy) or its investment philosophy (CIO or head of equities talking about investment philosophy or style). We will ignore any media interviews that focus on the short term; the idea is to  only include investment philosophy, process or long-term vision. 

The dossiers are available free of charge on our website under the ‘Research’ menu.

Note these are ‘first drafts’ compiled by young interns. We hope to make these deeper through a ‘wiki’ or ‘community’ model inviting anyone in the industry to send us suggestions for edits.

MMI interviews – in progress

When we started collating the media interviews, we quickly realised that most don’t cover the information needed for investors to make decisions. So we are in the process of approaching AMCs to grant us a recorded ‘research interview’ that would cover business management and investment process. We are appealing to them to view these like the ‘analyst calls’ that listed companies do for their investors.

The interviews are being recorded on AMC premises with minimal equipment & crew. We simply add the name/title banner, chapters, automatic closed captions, disclaimers etc but we do not edit the recording (except for technical glitches) though the AMC is sent a copy for a quick  review. These are being published on the dossier pages under the Media section.

MMI analysis – coming soon

We are working on launching the analysis section as a membership service. This will include short comments on – 

Business management

  • What’s the firm strategy? Is it about making the most returns for investors or asset gathering which is more returns to shareholders?
  • Is the firm making reasonable profits? 
  • How do they attract and retain key talent? 
  • What risks do investors take on when investing and how are they managed?
  • What are the opportunities and challenges for the firm?

Investment philosophy

  • If not on the website, a summary of the investment philosophy, style and process; how has it evolved over time under different CIOs?
  • How will the investment style perform over business cycles? When is it likely to underperform?
  • More specific questions on investments, based on what’s in dossier and media interviews
  • What’s the capacity for the firm and style, and how is it managed?

MMI business model

Incentives drive outcomes. Ideally, we would like to run a research service for financial advisers and investors that’s paid for by them. But we have realised that this is hard to achieve in India at this stage of the industry’s development. Hence, we have decided on a freemium model – the dossiers and interviews will be available for free while the analysis will be part of a membership service. The free part of the website will work as a ‘media’ portal so the audience can expect clearly marked sponsored content.

Conclusion – start researching funds

We believe that investing in mutual funds should be simple enough for retail investors. While we agree that most investors would benefit from their ‘asset allocation’ and ‘time in market’ decisions more than their fund selection decision, we believe that the latter becomes even more important if they wish to ‘invest and forget’. Having spent decades in this field, we understand the fund selection process and the associated issues. We have tried to innovate to come up with a low cost, yet effective, solution. We would welcome any suggestions for improvement. 


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