By:

Group members
Introduction

ICRA Limited (formerly Investment Information and Credit Rating

Agency of India Limited) was set up in 1991 by leading
financial/investment institutions, commercial banks and financial
services companies as an independent and professional Investment
Information and Credit Rating Agency.
Today, ICRA and its subsidiaries together form the ICRA Group of
Companies (Group ICRA). ICRA is a Public Limited Company, with its
shares listed on the Bombay Stock Exchange and the National Stock
Exchange
Range of Services
•RatingServices
•Grading Services

•Consulting Services

•Software Development, Business Intelligence and Analytics and

Engineering Services
•Knowledge Process Outsourcing and Online Software
Mutual Fund
A mutual fund is a legal vehicle that enables a collective group of
individuals to:
1).Pool their surplus funds and collectively invest in instruments / assets
for a common investment
objective.
2). Optimize the knowledge and experience of a fund manager, a capacity
that individually they may not have
3). Benefit from the economies of scale which size enables and is not
available on an individual
basis.
Mutual Fund Ranking Parameters by ICRA
•Return Analysis

•Portfolio Analysis

•Liquidity

•Corpus Size
•Average Maturity

•Portfolio Turnover
Return Analysis
• Risk adjusted return has been calculated on the basis of “Investor
Expectation Ratio”(ratio of excess return and risk).
•The excess return is the average daily active return of the scheme

calculated for the ranking period over the average peer group return.
•Average peer group return has been taken as the proxy for the

expected return.
•Higher the risk premium per unit risk, better it is.

•In the case of Index Schemes, the Return Analysis has been done on

the basis of Tracking Error. Lower the tracking error, better it

is. (Tracking errors are reported as a "standard deviation percentage"
difference. This measure reports the difference between the return an
investor receives and that of the benchmark.)
Portfolio Analysis
•MF schemes that do not have an adequately diversified portfolio carry a
higher risk than well-diversified schemes.
•For equity schemes, company concentration has been considered, sector

concentration has been evaluated for debt schemes.

•Company concentration has been judged taking NSE NIFTY as the

benchmark to decide the overexposure in any of the scrips in the portfolio.

•For debt schemes, the sectors that have been considered are Gilt; Non-

Banking Financial Companies, Manufacturing Companies,

Banks/Financial Institutions/Development Institutions, and Non-
Financial/Non-Manufacturing Companies. Overexposure to any of these
sectors has been penalized.
Liquidity
•The liquidity coefficient for a scheme is calculated as the weighted
average of the liquidity coefficients of all scrips in the portfolio.
•The liquidity coefficient of a scrip is calculated as the total number

of shares in the portfolio of the scheme divided by the total daily

turnover of the scrip. Schemes with higher liquidity have been
preferred.
 Corpus Size

Since a larger size of the scheme's corpus lends stability to an MF

scheme during periods of high redemption pressure, preference has
been accorded to large-size schemes. 
Average Maturity

Average maturity has been considered in the case of Debt, Gilt

and Liquid categories. Schemes with higher average maturity
carry higher interest rate risks as compared with schemes with
lower average maturity. Lower average maturity has been
preferred.
Portfolio Turnover

Schemes with low portfolio turnover have been preferred over

ones with higher portfolio turnover.
Weightages
Notations