Compare Mutual Funds
Compare mutual funds side by side with Nivesty. Analyze returns, CAGR, risk, SIP performance, volatility, drawdown and other important metrics to make informed mutual fund investment decisions.
How to Compare Mutual Funds
Evaluating mutual funds requires a structured, multi-dimensional framework beyond short-term returns. Follow these key principles to compare schemes objectively:
- Compare Historical Trailing Returns: Analyze performance over 1-year, 3-year, 5-year, and 10-year horizons across market cycles.
- Evaluate Compound Annual Growth Rate (CAGR): Use CAGR rather than absolute returns to evaluate true geometric wealth compounding.
- Simulate Historical SIP Returns: Review rupee-cost averaging and compounding growth under Systematic Investment Plans.
- Assess Volatility and Risk Metrics: Check Standard Deviation (volatility) and Sharpe Ratio to verify risk-adjusted performance.
- Examine Maximum Drawdown: Evaluate downside protection and recovery duration during major market downturns.
- Compare within the Same Category: Always compare peer schemes within the same category (e.g. Large Cap vs Large Cap).
- Check Expense Ratio: Opt for Direct-Growth plans with lower Total Expense Ratios (TER).
- Past Performance Caution: Historical returns do not guarantee future performance; focus on fund manager discipline.
What Should You Look for When Comparing Mutual Funds?
Key quantitative metrics to look for when comparing mutual funds on Nivesty:
- CAGR vs Absolute Return: Annualized compounding return over multi-year periods.
- Sharpe Ratio: Excess return earned above the risk-free rate per unit of total risk.
- Standard Deviation: Volatility indicator measuring NAV fluctuation around the mean.
- Maximum Drawdown: Largest peak-to-trough decline in historical NAV.
- Benchmark Alpha: Consistency in outperforming the category index (e.g., Nifty 50 TRI, Sensex).
- Portfolio Turnover: Stability and longevity of fund management strategy.
Mutual Fund Comparison FAQs
How do I compare two mutual funds?
To compare two mutual funds effectively, evaluate them within the same SEBI category across 1-year, 3-year, and 5-year CAGR returns, SIP performance, Sharpe ratio (risk-adjusted return), volatility (standard deviation), maximum historical drawdown, and Total Expense Ratio (TER).
Which mutual fund metrics should I compare?
Key metrics to compare include Compounded Annual Growth Rate (CAGR), Sharpe Ratio, Standard Deviation (Annualized Volatility), Maximum Drawdown and recovery timeline, Category Benchmark Alpha, Portfolio Turnover, and Expense Ratio.
Is higher mutual fund return always better?
Not necessarily. A fund with higher returns might take excessive risks or suffer severe drawdowns during market downturns. Evaluating risk-adjusted indicators like the Sharpe Ratio ensures returns are sustainable relative to volatility.
How should I compare mutual fund risk?
Compare risk by analyzing Standard Deviation (NAV volatility), Sharpe Ratio (excess return per unit of total risk), and Maximum Drawdown (the steepest historical peak-to-trough decline).
Can I compare SIP returns between mutual funds?
Yes. Nivesty simulates historical monthly Systematic Investment Plan (SIP) investments to compare actual accumulated wealth, total investment capital, and rupee-cost averaging outcomes across funds.
Does past performance guarantee future returns?
No. Past performance reflects previous market cycles and does not guarantee future results. However, consistent long-term performance across varied market conditions indicates strong fund management processes and risk controls.