sharpely offers one of the most advanced mutual fund screening tools available to investors. With over 40 metrics for in-depth analysis, sharpely mutual fund screener is your one-stop shop for creating insightful mutual fund screens. And on top of that, you can invest in the screen in a completely automated manner. Investing directly in a screen is covered here.
Next, we provide you with a detailed guide so that you can use sharpely mutual fund screener to its full potential.
Before we move on to the screening user guide, it is important to understand the process of mutual fund screening.
Mutual fund screening is used by both quantitative and qualitative investors to filter the list of mutual funds that they want to invest in. The purpose of MF screening is to narrow down the universe of funds to a more manageable number that fits specific investment strategies or goals.
Investors can use various factors (metrics) to screen mutual funds, such as basic filters (AUM, expense ratio, minimum SIP amount), relative performance (alpha, quarterly and yearly consistency), portfolio measures (P/E ratio, P/B ratio, modified duration), and risk measures (fund volatility, category volatility, max drawdown).
By applying these filters, investors can identify potential investment opportunities and make informed decisions about which funds to buy or sell.
Mutual fund screening can be used for various purposes, such as finding underperforming funds, identifying funds with high-quality management, selecting funds that match a particular investment style, or creating a diversified portfolio.
Let’s look at an example:
Suppose an investor wants to identify equity funds in the mid-cap category that are consistently generating alpha.
She will start first by filtering the universe to only include funds in the mid-cap category. This narrows her universe to 38 funds out of 1175 funds.
Next, she will filter funds that have yearly consistency in the top 25% (her definition of what is consistent). This brings the list to 8 funds. Next, she will filter funds that have alpha in the top 25% (again, her definition of good alpha). Now the list is down to 2 funds.
This process is called sequential screening where each filter is applied sequentially to the remaining list of funds.
In the next article, we will show you the step-by-step process to create your first mutual fund screen.