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Isn’t it great to have someone stand by you in times of need? Like family or friends who play that role in your every endeavour. Likewise, in the field of investment, a company “Value Research” is the one which helps every amateur who enters the arena of investments. Let me tell you how.

One day, I along with my friends were watching India-West Indies cricket match. In the break, an advertisement promoting mutual fund was playing on and in that ad, a woman was saying how she bought a car from her quick earnings from investment in mutual funds.

Seeing that, one of my friends asked me how is this possible that one can earn so much money in such a less time? And with that, a flood of questions came my way by others too. Like what is this mutual fund? How to invest in that? Is it risky? How should we select which fund to choose? Which fund is less risky?

With the bombardment of all these questions, I was thinking how to answer them in a simple way? What should I do? Even I didn’t have answers of all of these questions. Then, this company “Value Research” came to my help. This is a company where you will find a one-stop solution to all of your questions related to all type of investments whether it be mutual funds or stocks or any other funds.

I recommended them to visit the website of this company i.e. to clear their doubts regarding mutual funds. In this article, however, we will discuss –

  • What is Value Research Fund Ratings?
  • How is it rated?
  • Calculation Method
  • Why Value Research is useful to you?
  • How it will help you to choose the right funds to invest in?
  • Etc. among many things.

Let’s start from the beginning i.e. background of this company.


This company “Value Research” came into existence in 1990. It works from Delhi and Mumbai. It specialises in the analysis of stocks and mutual funds and other investment options and publishes it’s own “Fund Ratings”.

This is an independent company and works in an unbiased manner so as to give the readers fair and right advice. It is widely recognised as such by many fund management companies. Investors do consider Fund Ratings published by this company while diversifying their assets.

What is Value Research “Fund Ratings”?

This is published by the company as a result of analysing funds or stocks on many yardsticks. This rating is a kind of metric that measures a fund’s performance in a volatile market.

It measures a fund’s performance on a scale of 1 star to 5 stars. 5 stars being the top performer and 1 star be the worst performer.

While measuring the fund’s performance, Value Research takes into account the associated risk and fund’s history of returns in comparison to it’s peers.

Then, it releases it’s rating, thereby, indicating a fund’s performance on risk and return standpoint.

How they are rated?

Mainly, the company considers three types of funds for rating purposes. They are –

  • Equity Fund
  • Hybrid Fund
  • Debt Fund

Now, these funds are considered only if they have a performance track record and net asset value(NAV) of the fund is released by the company on a regular basis.

There is required time period for these funds to be functional for rating purposes. For equity and hybrid funds, it is necessary for them to have a performance track record of at least 3 years and same time period is fixed at 18 months for debt funds.

On the top of this, it is necessary to have minimum number of 10 funds in each category for rating purposes.

For a better assessment, fund ratings of equity and hybrid funds for two time period of 3 years and 5 years are combined to arrive at a single assessment of each fund’s risk rating vis-à-vis other funds in the concerned category.

For debt funds, the same is taken for a period of 18 months on a weekly risk-adjusted performance basis.

Are Fund Ratings biased?

A big NO. The company Value Research works in an independent manner. It has earned the reputation of being unbiased and fair by many reputed fund management and investment companies.

For analysis of funds or ratings of funds, it only considers the past performance of the funds or stocks thereby objectively analysing it’s performance. It never goes into subjective analysis thereby removing any chance of it being biased. It never goes into opinion-based future outlook of the company for rating purposes.

So in a nutshell, one can easily rely on it’s ratings and it’s analysis. However, this is a limitation in efficacy of it’s ratings.

The limitation being, as the company only considers a fund’s past performances only, it leaves the future prospects of a company out of it’s analysis thereby not giving the right picture of a fund’s ability to perform in future.

Calculation Methodology of Fund Ratings

Basically, the company uses two parameters to determine the rating of a fund. They are –

  • Value Research Fund Risk Grade
  • Value Research Fund Return Grade

Let’s deal with them one by one.

Value Research Fund Risk Grade

Under this, the company calculates the risk of loss associated with the fund in quantitative value. To calculate Fund risk, it uses a formula i.e. –

  • Fund risk of Equity and Hybrid Funds are calculated slightly different from the Debt Funds’.
  • First of all, it gathers required data such as –
    • monthly or weekly returns a fund generates,
    • State Bank’s 45-180 days term deposit rate is also taken as the base for “Risk-free Return”.
  • Now for equity and hybrid funds, the company compares monthly/weekly returns of the fund against monthly Risk-free Return.
  • For Debt Funds, it compares monthly/weekly returns of the fund against weekly Risk-free Return.
  • Then, in every month or week the fund has underperformed risk-free return or fund’s return has been less than that of risk-free return, the magnitude of underperformance is calculated in quantitative terms.
  • An average of fund’s underperformance is taken out over a period of time.
  • And that average is then compared against the category’s average to arrive at a Risk score or Risk Grade of the particular fund.
  • The risk score of a fund is further categorised into as follows –
Category Distribution
High Top 10%
Above Average Next 22.5%
Average Middle 35%
Below Average Next 22.5%
Low Bottom 10%

Value Research Fund Return Grade

This one takes into account the fund’s return aspect to measure a fund’s performance. It uses almost same formula as that of risk grade one with a slight difference. They are –

  • It also uses risk-free return for comparison purpose and uses the return data of a fund.
  • However, fund’s returns are adjusted dividend, bonus and rights before calculation so as to arrive at a risk-adjusted returns with the exception of loads. Loads are not adjusted, it is included for calculation.
  • Likewise, it compares the monthly/weekly return of a fund against monthly/weekly risk-free return.
  • In comparison, it calculates every month’s or week’s excess return over risk-free return to arrive at total return of the fund that is in excess of risk-free return.
  • Then an average of total excess return is calculated on monthly basis to derive risk-adjusted return.
  • Same is compared with category average to arrive at a final return score.
  • Here, if the average return is in negative value, then risk-free return is taken as a base for calculation.
  • If the final return score is above 1 then fund is performing better than it’s category and vice-versa.
  • This return grade is also further categorised into same categories as mentioned above in the table.

How Value Research is important to common people?

Even today a large number of people are not aware of basics of investments and the majority of them have never even invested in risk-prone investment options such as mutual funds, stocks etc.

Most people prefer risk-free investment options such as fixed deposit in a bank. But options like mutual funds and stocks also give an excellent returns if invested in a wise manner.

Though these investment options do contain risk in itself and sometimes returns are even less than risk-free returns but at the same time it also provides opportunities to earn better returns it decisions are taken wisely.

Value Research helps the common amateur people who is new to the area to learn the basics of these risk-prone investment options. And at the same time, it provides a fair and right advice to the people to choose the right funds and stocks to invest in through it’s various fund ratings.

It works in an objective and unbiased manner so as to provide the right picture of the investment arena. It does not go into subjective analysis of the funds and stocks thereby avoiding any opinion-based ratings which is more prone to inaccuracies.

So, if you are thinking of investing in mutual funds or stocks, take the help of experts as you alone would not be able to invest so much of your precious time in choosing the right funds. However, you should know the basics of it, Value Research will help you in better research on the topic.

Sources: –

For further information refer Company Vakil experts.

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