Mutual funds and pension mutual funds create and manage a portfolio of various securities in exchange for the money they collect from the public. Each investor becomes a partner in the portfolio of the mutual fund or pension fund by buying or receiving a contribution. These funds are divided into different types according to the securities they contain in their portfolios: equity funds, balanced funds, public domestic borrowing funds, etc. The investor chooses which fund to invest in. Naturally, the increases or decreases in the prices of the securities included in the selected fund are reflected to the investor as gain or loss. Therefore, the investors must follow the fate of the funds they transfer their savings to. Similarly, it is important that those who are new to the system can determine in which fund they will accumulate in a healthy way.
How Can The Investors Evaluate The Funds?
First of all, it should be noted that each fund informs the investor about the risk level of the fund in the investor information form that it has to regulate legally. Thus, an investor is informed that he or she takes high risk by investing in a stock fund or low risk by investing in a public internal borrowing fund. It is aimed to help the investor choose a fund suitable for her/his risk appetite by using this information. Let’s say an investro chose the fund to transfer her savings in accordance with the risk appetite in line with this information. Now, the savings of the investor has become part of a portfolio created by professional managers. Fund managers build and manage a portfolio of various securities using the savings of many investors.
Their aim is to increase the value of the portfolio, that is to say, by constantly following the market and trading securities correctly and on-site. Increasing the value of the portfolio means that the investor earns income and his accumulation increases. Funds regularly share their performances through channels, i.e., websites, media, etc. Thus, it is possible to see what the fund earned and lost in the past period.
Is this information alone sufficient for the investor to follow the fund?
Individual performance information of the fund is not sufficient to follow the investment in a healthy way. Because, as we have explained above, there is a risk factor that the investor faces while making this investment. Therefore, this risk element should also be taken into account when following the fund’s past performance. For example, the fund has earned 10% last year. Let’s assume that there are five other funds that have a 10% return similar to this fund. Which is more successful? The answer to this question is related to the level of risk taken by the funds. Which of the funds that provide the same return has achieved this by taking lower risk is more successful. At this point, it is quite easy to determine the successful fund. However, let’s point out that there are a lot of funds in the market with different returns and different risks.
How is the past success of the fund understood?
The answer to this question is the use of fund ratings.Fund rating is a convenient composite measure of both returns and risks of funds. First, the returns and risks of the funds are analyzed using an original, scientific and quantitative method developed by Ludens. The findings obtained as a result of the analysis are converted to the notes we express with the star so that the success of the fund can be easily understood and compared with other funds. Each fund is graded with stars ranging from 1 to 5. Thus, for example, if the fund is 5-star, the investor can easily understand that it was among the most successful funds in its category in the past period and if it is 1-star, it was among the most unsuccessful funds.The fund ratings are renewed regularly on a monthly basis. As mentioned above, the fund portfolio is not fixed; constantly changes, while some securities are sold, new ones are bought. Therefore, the performance of the fund should be monitored and examined periodically accordingly. Investors can then follow the success of their funds on a regular basis.Fund ratings are an easy-to-understand, easy-to-access, and impartial source of information about how investors’ savings are assessed.Fund ratings are advising investors on whether to keep their savings on the same fund.
Can new investors or those who want to change their funds use a fund rating?
For all investments there is no guarantee that the return obtained in the previous period will be obtained in the future period. The grades obtained from the fund rating are also given according to the success of the funds in the previous period and it cannot be said that they will remain the same in the future. It is possible for investors who are considering purchasing funds or considering changing their funds to have an idea of the past performance of the fund only by looking at their fund ratings. In this sense, the information obtained from the fund ratings is only a recommendation and there is no guarantee or binding.