A proprietary framework of evaluating Portfolio Management Services by PMS AIF WORLD.
In the older days the captains of the greatest ships navigated by looking at the North Star. The north star is constant when looked at from the earth and helps determine directions. QRC is our NORTH STAR. We have close to 200 PMS strategies listed on our website and each has it’s own trajectories and characteristics. QRC framework helps you choose the strategies that work best for you by fixing what your investment North Star is – Quality, Risk and Consistency. When you ensure that the QRC factors are your constants you are on the right track. QRC deep dives in to the performance of the portfolio to bring out the metrics relevant to you as an investor and helps you choose the portfolio that will serve your investment objectives.
The QRC is our trademarked proprietary framework develop after extensive work with multiple data points and looking at years of performance numbers. QRC as a framework answers questions beyond just conventional performance numbers we look at factors like outperformance compared to multiple indices, risk adjusted returns, consistency of returns and other such parameters to make QRC one of the most effective ways of measuring all round portfolio performance.
1Y: 1 Year; value or parameter calculated based on 1 year NAV data of the fund.
SI: Since Inception; value or parameter calculated based on NAV data available since inception date of the fund .
Absolute Return: The perfromance in terms of percetnage return for respective fund.
Annualized Return: CAGR return’s for the respective fund to indicate the rate of compunding over the respective time period.
Every fund is linked to a benchmark index. The fund’s relative performance can be judged by checking how much higher returns is it generating compared to that index. This excess return that the fund produces in comparison to its benchmark index is known as ‘Alpha.’
Beta measures the fund’s volatility compared to the market as a whole.
– A Beta of 1 means that the fund’s volatility is exactly same as the markets. If the market moves up/down by 20%, the fund will also move up/down by 20%.
– A Beta of more than 1 implies that the fund is more volatile than the markets. If the market moves up/down by 20%, the fund will move up/down by more than 20%.
– A Beta of less than 1 implies that the fund is less volatile than the markets. If the market moves up/down by 20%, the fund will move up/down by less than 20%.
Volatility / Standard Deviation:
Volatility measures the rate at which the price increases or decreases for a given set of returns. In other words, it measures the risk or uncertainty associated.
Standard Deviation (SD) is used to check the variability of the expected return of the fund. Its value depends on a lot of factors like capital allocation towards each asset/sector in the fund, standard deviation of each investment in the fund, and so on. In other words, SD is used to measure the consistency of the fund’s returns.
– A high SD might indicate that the portfolio risk is high, and return is more volatile and unstable in nature.
– A low SD might indicate less volatility and more stability in the returns of a portfolio and is a very useful financial metric when comparing different funds.
Sharpe ratio measures the performance of an investment compared to a risk-free asset (like Fixed Deposits or Government bonds), after adjusting for its risk. In other words, it is the average return earned in excess of the risk-free return compared to the total amount of risk borne. When comparing two assets versus a common benchmark, the one with a higher Sharpe ratio provides is indicated as a favorable investment opportunity at the same level of risk.
Information ratio (IR) is a measure to check the performance of the fund manager. It shows the consistency of the fund manager in generating superior performance, adjusted for risk vis-a-vis the benchmark index. The ratio throws light on the fund manager’s ability to generate sustainable excess returns or abnormally high returns over a period of time. When comparing funds, the fund with the higher IR indicates better risk-adjusted returns.
Consistency Ratio is a ratio to evaluate the funds on how consistently outperformed the respective benchmark in the given time period. For this ratio higher the value better the consistency of the fund.
Treynor Ratio simply determines how much excess return did the fund generate for each unit of risk taken. It is also called reward-to-volatility ratio since it portrays how much an investor is rewarded for each unit of sytematic risk that is undertaken by the fund. This excess return is over and above a risk-free investment rate.
The risk-free rate of return is the interest rate an investor can expect to earn on an investment that carries zero risk. The risk-free rate is a theoretical number since technically all investments carry some form of risk.
The Relative Alpha is the difference between the fund’s 1Y alpha and the average of 1Y alpha of all the funds in the same category (Large Cap, Multi Cap, Mid & Small Cap)
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