We have identified the best equity-oriented schemes
available in the market today based on the following 3
parameters: the past performance as indicated by the returns,
the Sharpe ratio and Fama (net selectivity).
The past
performance is measured by the returns generated by the
scheme. Sharpe indicates risk-adjusted returns, giving the
returns earned in excess of the risk-free rate for each unit
of the risk taken. The
Sharpe ratio is also indicative of the consistency of the
returns as it takes into account the volatility in the returns
as measured by the standard deviation.
FAMA measures the
returns generated through selectivity, ie the returns
generated because of the fund manager's ability to pick the
right stocks. A higher value of net selectivity is always
preferred as it reflects the stock picking ability of the fund
manager.
