Stock ratings and mutual funds

If you are a frequent visitor to Value Research Online, which readers of this magazine often are, you would have heard a lot about our new 'Stock Ratings' system. If you are exclusively a mutual fund investor, then it's likely that you are ignoring all this talk about stock ratings because, indeed, it has nothing to do with you. That is not true at all.

Our stock ratings system will also benefit our mutual fund investors. Let's understand why I'm saying this.

It has been three decades since we launched our 'Mutual Fund Ratings'. During these decades, millions of Indian investors like you have used our rating system to choose good funds to invest in and, just as importantly, to avoid bad funds they were tempted by. Our fund ratings are unique in being completely objective (purely numbers-driven with no subjective element) and freely available to every investor as soon as they are updated every month.

Starting January 1 this year, we have launched our stock ratings based on the same principles and the same underlying approach. Just as we do for the mutual fund ratings you use, we have rated every stock; the ratings are freely available and completely objective. This stock rating system has been years in the making. We have researched, designed and evolved the methodology over a long period and hope that in the years and decades to come, our stock ratings will provide as robust an investment framework for equity investors as our fund ratings have done over the decades past.

The interesting part for you is that the stock rating system will form an important component of our (and we hope your) research and analysis of equity and hybrid mutual funds. As a mutual fund investor, you may wonder how a stock rating system is relevant. After all, you invest in funds, not individual stocks. However, the stocks that a fund manager picks provide crucial insights into their investment style, risk appetite and stock-picking capabilities. By analysing the ratings of stocks held by a scheme, we can better evaluate the quality of investments made by the fund and the fund manager's stock selection skills. We were always doing this, but our stock ratings create the opportunity for a rapid and standardised analysis of a portfolio full of stocks.

For example, a fund loaded with stocks rated 1 or 2 stars indicates sub-optimal bets that may or may not pay off. On the other hand, a portfolio filled with 4 and 5-star rated stocks shows the manager's focus on quality companies with solid fundamentals. As such, our analysis of equity funds is a valuable tool.

Moreover, in addition to our analysis, as an informed investor, you can always use our stock ratings to cross-check a fund manager's stock picks. By supplementing your mutual fund research with our stock ratings, you can analyse the merit of equity funds in greater depth. Over time, integrating these ratings in fund analysis will enable better fund selection and more targeted portfolio construction.

Currently, stock ratings are not directly integrated into our display of equity fund information. Members can look up stocks in a fund's portfolio and then check their ratings separately. However, this integration is in the works and will add speed and convenience to connecting equity fund portfolios, your own portfolios, and stock ratings. At the end of the day, Value Research's entire toolbox of features is an integrated whole, and any enhancement to one part enhances everything.

Moreover, our Premium users can integrate all these tools - old and new with the unique features that are only available to them. As for where you need to go, Value Research Premium has a set of invaluable tools, again, by far the best any Indian mutual fund investor would have access to. Here's a brief description of what you will get:

Portfolio Planner: These are custom portfolios suggested to you as part of your premium membership. The algorithm that we have evolved takes into account your goals, your income, your saving capacity and several other factors.

Portfolio Assist: Only a few members are starting their investing from scratch. For most of you, a big question is whether your existing investments fit your goals. This is often a tricky question to answer because there are a lot of implications of switching old investments, not the least of which is taxation. In the Premium system, you can get an evaluation and a suggested fix-list based on our expert teams' inputs.

Analysts' Choice: Often, investors want to choose their funds for some particular investment purpose. There are over 1,500 funds available to you, and even with the help of our rating system, it's a lot of work to zoom in to the right set. However, that won't be a problem for you because, as a Premium member, you will have access to Analysts' Choice. Instead of the 39 official types of funds, we have created eight investor-oriented categories that match precisely with your financial goals. In each of these, my analysts and I have carefully selected a handful of funds to serve you with the best outcomes.

Of course, this is just the beginning, and there's a lot more to Premium. So open vro.in/premium in your browser, read more details of these features, see glimpses of what Premium has to offer, read testimonials of our members and start managing your investments right away!