The objective of the quantitatively driven Morningstar Fund Awards is to recognise those funds and fund groups that have added the most value within the context of a relevant peer group for investors over the past year and over the longer-term.
Do note, this is distinct from the qualitative ratings issued by Morningstar’s research team.
Looking at performance…
The awards are annual, so we believe it is appropriate to emphasise a fund’s one-year performance. However, we do not believe that it serves investors well to give awards to funds that have posted a strong one-year return, but have otherwise not delivered good results for investors.
Therefore, the awards methodology emphasises the one-year period, but funds must also have delivered strong three- and five-year returns after adjusting for risk within the awards peer groups in order to obtain an award. Further, they must have been at least in the top half of their respective peer groups in at least three of the past five calendar years.
We believe this combination will ensure that the awards are given to funds which have earned strong one-year results, and have also shown they have the ability to earn strong long-term returns without undue risk.
Morningstar Category Awards
These awards are given to the funds with the best risk-adjusted performance within their respective categories, subject to qualitative review.
In order to ensure Morningstar analysts can carry out effective qualitative checks for potential winners, only open-end funds that have reported at least four complete portfolios to Morningstar between September 1, 2015 and December 31, 2016 are eligible for an award.
Exclusions:
- Insurance funds
- Closed-end funds
- Currency-hedged share-classes of funds
- Funds or share classes in unrated Morningstar categories
- The smallest 10% of funds in each category are excluded from the awards (based on the latest June end portfolio size expressed in Indian Rupees). In lieu of this measure, analysts may also exclude funds with less than Rs 1,000 million in assets on June 30 or the nearest date for which assets are available.
Post the funds being filtered through the scoring mechanism, Morningstar’s qualitative research analysts will also complete a couple of checks. Upon the completion of all the screens, the nominees and winner will be arrived at.
Intermediate Bond
- BNP Paribas Flexi Debt
- ICICI Prudential Long Term Plan
- UTI Dynamic Bond
Short Term Bond
- Birla Sun Life Short Term Opportunities
- Birla Sun Life Short Term
- ICICI Prudential Banking & PSU Debt
Equity: Large Cap
- Kotak Select Focus
- Mirae Asset India Opportunities
- SBI Bluechip
Equity: Mid and Small Cap
- DSP BlackRock Micro Cap
- Franklin India Smaller Companies
- Mirae Asset Emerging Bluechip
Morningstar Fund House Awards
These awards are given to the fund groups with the strongest performing fund line-ups on a risk adjusted basis. Fund performance is evaluated within the Morningstar Categories.
For each of the below three groups, Morningstar will calculate a House Score using the following methodology:
- Determine the 5-year Morningstar Risk-Adjusted Return (MRAR) for each share class of each fund run by a given house, and the percentile rank of that return score within its Morningstar Category.
- Determine the average percentile rank of each fund's MRAR by taking the mean MRAR percentile rank of all its classes.
- Determine the mean percentile rank of each fund house's MRAR by taking the mean of its funds' MRAR percentile ranks (the lower a group's mean percentile rank, the better its performance).
- Adjust the score using the probability function to compensate for difference in fund house sizes. The adjustment enables us to account for the fact that the number of funds varies from one group to another and therefore makes it possible to compare the different mean scores of the competing groups.
Post the above calculations, Morningstar’s qualitative research analysts will conduct a round of checks to arrive at the nominees and the winner.
Best Fund House Debt
Fund houses with at least three fixed-interest funds with Morningstar Ratings available for sale in a given market are eligible. Money markets are not eligible for inclusion.
- Birla Sun Life AMC
- SBI AMC
- UTI AMC
Best Fund House Equity
Fund houses with at least five equity funds with Morningstar Ratings available for sale in a given market are eligible.
- Birla Sun Life AMC
- ICICI Prudential AMC
- L&T Finance AMC
Best Fund House Multi-Asset
Fund houses with at least five equity funds and five fixed-interest funds with Morningstar Ratings available for sale in a given market are eligible. Money markets are not eligible for inclusion.
- Birla Sun Life AMC
- ICICI Prudential AMC
- L&T Finance AMC
