“Fundsage”
Assessing Risks in Debt Mutual Funds

Conventional mutual funds evaluation approaches focus almost entirely on past returns. That can often be downright disastrous in the context of debt mutual funds.

We have designed FundSage to address precisely this, by measuring various risks in debt mutual fund investing – credit risk, interest rate risk and liquidity risk.

Here is an eye-opening graph

on the relationship between 3-year historical returns (X-axis) and subsequent 1-year forward returns.

The “stars” of the past often turn out to be laggards in the future and vice-versa.

This goes to show how tricky it can be to look exclusively at historical returns while evaluating debt mutual funds.