SmartMoney Score™ Methodology
In one line: the SmartMoney Score™ distils 20 factors across 5 pillars into a single 0–100 rating, a 1–5 star grade ranked against peers, and a forward-leaning Momentum Outlook — so you can judge a fund's quality at a glance, then dig into the detail.
Why we built our own rating
The best-known rating systems each capture part of the picture. Morningstar's star rating is rigorous but purely backward-looking. Its Medalist rating adds a forward view through manager, process and parent quality. CRISIL leans on portfolio construction — concentration, liquidity, asset quality. And outside funds, Marc Chaikin's Power Gauge showed how twenty distinct factors can be distilled into one honest, actionable signal.
The SmartMoney Score™ takes the strongest idea from each and rebuilds it for Indian mutual funds: category-relative like Morningstar and CRISIL, forward-aware like the Medalist rating, and multi-factor like the Power Gauge — expressed in a rating any investor can read in seconds.
How the model works
Every fund is measured on 20 factors. Each factor is normalised across the rated universe so it becomes comparable on a 0–100 scale, then the factors are grouped into five pillars. The pillars combine — using fixed, disclosed weights — into the overall score. We publish the pillars, the factors inside them, and the pillar weights below. What we keep proprietary is the precise weight of each individual factor and the exact normalisation curve — the "recipe", not the ingredients.
Performance
28%Risk-adjusted returns over 3 and 5 years, excess return over benchmark, and participation in rising markets.
- ▪ 3-year risk-adjusted return vs category
- ▪ 5-year risk-adjusted return vs category
- ▪ Excess return over the fund's benchmark
- ▪ Participation in rising markets (up-capture)
Risk & Downside
22%Volatility, maximum drawdown, downside-adjusted return (Sortino) and how much the fund falls when markets do.
- ▪ Volatility (standard deviation)
- ▪ Maximum drawdown (worst peak-to-trough fall)
- ▪ Downside-adjusted return (Sortino ratio)
- ▪ Protection in falling markets (down-capture)
Cost & Efficiency
16%Expense ratio vs category, Jensen's alpha, information ratio (alpha per unit of active risk) and alpha per unit of market risk.
- ▪ Expense ratio relative to category median
- ▪ Jensen's alpha (return above what risk justifies)
- ▪ Information ratio (alpha per unit of active risk)
- ▪ Alpha per unit of market risk (beta)
Portfolio Quality
18%Diversification, quality of holdings, portfolio liquidity and whether the fund's size suits its mandate.
- ▪ Diversification (top-10 holdings concentration)
- ▪ Quality of holdings (equity quality / debt credit quality)
- ▪ Portfolio liquidity (ease of exit)
- ▪ Fund size vs mandate (AUM fit)
Stewardship & Momentum
16%Manager tenure, fund-house pedigree, recent relative strength and the fund's performance trajectory.
- ▪ Fund manager tenure & track record
- ▪ Fund-house pedigree & investor-first record
- ▪ Recent relative strength vs peers
- ▪ Performance trajectory (improving or fading)
From score to stars
The 0–100 score is mapped to a 1–5 star rating using a bell-curve distribution, the same shape Morningstar uses — most funds sit in the middle, with fewer at the extremes. Stars rank a fund against the rated universe (and, as each peer category grows, against its category):
| Rating | Distribution | Label | What it means |
|---|---|---|---|
| ★★★★★ | Top 10% | Excellent | Among the strongest funds in the rated universe across all five pillars. |
| ★★★★ | Next 22.5% | Very Good | Above-average quality with few weak spots. |
| ★★★ | Middle 35% | Average | Solid and broadly in line with peers. |
| ★★ | Next 22.5% | Below Average | Lags peers on several pillars. |
| ★ | Bottom 10% | Weak | Trails the universe on most measures. |
The Momentum Outlook
Ratings tell you where a fund stands; the Momentum Outlook hints at where it's heading. It reads two of the stewardship-pillar factors — recent relative strength versus peers and the fund's performance trajectory — and summarises them:
- ▲ Strengthening — recent momentum is improving relative to peers.
- ▬ Steady — performance is tracking its peer group.
- ▼ Softening — recent momentum is fading relative to peers.
The Outlook describes a fund's recent trajectory. It is not a buy, sell or hold recommendation, and not a forecast of future returns.
Category-relative by design
A small-cap fund and a short-duration debt fund live in different worlds, so we never compare them head-to-head on raw returns. Funds are always assessed within their peer category, and each fund's page shows its rank within that category (e.g. "#2 of 8 in Mid Cap"). As our coverage of each category deepens, scoring becomes fully category-relative.
Data, sources & refresh
- Inputs: returns, volatility, drawdown, Sortino, beta, alpha, expense ratio, AUM, holdings concentration, liquidity, credit/holding quality, manager tenure and fund-house record.
- Sources (production): AMFI NAV history, scheme portfolio disclosures, and benchmark data. Figures on this site are currently illustrative while we finalise the live AMFI data pipeline.
- Refresh: scores are designed to update as fresh NAV and portfolio data arrive; the model itself is reviewed periodically.
What this rating is — and isn't
The SmartMoney Score™ is a rules-based, educational research tool to help you shortlist and compare funds. It is not personalised investment advice, not a recommendation to buy or sell any scheme, and no rating guarantees future performance. A five-star fund can still fall; a one-star fund can still rise. Always read the scheme documents and consider your own goals and risk tolerance — or consult a SEBI-registered investment adviser — before investing.