The past couple of decades have seen India’s mutual fund (MF) industry gain currency and create an edge for itself in the personal finance space, and raise the share of Indian households in overall savings pie.

Over the five years through 2025, CRISIL expects the industry’s assets under management (AUM) to continue its double-digit growth and cross the Rs 50 lakh crore mark. Equity funds are expected to vanguard this growth trajectory, with their share expected to rise from 42% today to 47%, in line with global peers. The growth triggers include India’s favourable demographics, increased financialisation of savings, an inflation-targeting regime, and rising per-capita income. For this growth to sustain, independent research, data, and analytics will have to play a material role in empowering investor decisions.”

The need for independent research and analytics has grown manifold, because of the growing range and complexity of products, increasing market volatility, a wider and savvier investor base, and changing intermediation models.

Appropriate and timely investor decisions are a pre-condition for holistic, sustainable growth of the domestic MF industry. That, in turn, is a function of access to relevant and accurate, actionable information, especially at a time when regulatory persuasion is tilting towards advisory-type intermediaries.

Here, independent mutual fund rankings play an important role as they follow neutral and relevant criteria, afford objective decision-making, and enhance investor confidence in the long run.

When selecting funds, it’s important for investors to look at the attributes of the underlying portfolio, too, and not just focus on a performance yardstick like net asset value (NAV). The CMFR ranking methodology does just that, which improves its predictive intelligence and relevance. For example, a high percentage of debt funds with significant exposure to defaulted papers since mid-2018 were ranked low at CMFR 4 and 5 – when the underlying papers defaulted – compared with the higher rankings given to them elsewhere based on just NAV. Such well-rounded CFMR insights help stakeholders take timely decisions.

Across different periods – long or short – top-ranked equity funds (CFMR 1 or 2) have shown consistent outperformance. That’s why CMFR, which just turned 20, has emerged as the go-to tool of treasury managers and investment managers when shortlisting mutual funds.

As regulations evolve, CRISIL keeps improving the granularity of rankings with the end-objective of making the process independent, and thereby enable investors to make wise decisions.