Consistency in Mutual Funds

Investors are told not to focus on short term returns (I assume anything lower than say 3 – 5 years) and instead focus on longer term returns since its there that fund managers are able to showcase their ability to provide returns much better than say a simple ETF on the Index.

But how consistent they really are?

I decided to try out a way and see whether funds were consistent in terms of performance. Rather than use 1 or 3 year performance, I decided to use to the 5 year performance as the measure. I also did not pick only the winner but picked the Top 10 for the period under consideration.

I used the Top 10 since it meant that these funds were still in the top quartile and returns were also maybe due to their process and not just Luck (Luck would mean that you do get into the Top 10 maybe once or twice when you bet big on a sector and it worked).

Data for the analysis was as usual from Valueresearchonline and since it does not provide survivor free data, the data presented here has Survivor bias. We really do not know how many winners of yesteryears are no more available for investing (most of the time, funds that fail to meet certain performance (AUM / Returns) are just merged with a better fund).

The best fund based on this analysis seems to be Reliance Growth Fund, but the last time hat fund made it to the top 10 was in 2010 (period under consideration being 2005 – 2010).

So, here we go with the table (click to expand)