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Why CRISIL rank is not given to Direct type Mutual funds?


Date: 04 Feb 2016   Posted By: Paresh Gujarati     Group: Finance & Banking    Category: Investments   

I have started investing in Axis long term equity fund - Direct type (Growth). Before investing I have inquired about the ranking of this fund by CRISIL. The rank was 1 was given to Axis long term equity fund - (Growth) of broker type.

So, I immediately invested Rs. 500 to Axis long term equity fund - Direct type (Growth).

But after investment I found that CRISIL has not given any rank to Axis long term equity fund - Direct type (Growth) but no. 1 rank is given to broker type same fund. What is the difference between this? Does it mean Direct type are not advisable to be invested?


Confused with Mutual funds of direct type and broker type? Want to know the CRISIL rating of direct Mutual funds? Keep checking this Ask Experts thread to gain more information from our experts.


Author: Mahesh    10 Feb 2016      Member Level: Diamond     Points : 6  (Rs 6)    Voting Score: 0

CRISIL is an independent algorithm that shares it's data with the brokers and the media. So they usually distribute the data to the brokers who are selling the mutual funds through their service. So it is obvious that the direct funds (that we get from the fundhouse itself) won't be entertaining any positive or negative specific data related to their ranking.

Difference between the direct and the broker chained funds is that you're losing the money on trail commission if you go through broker. In case of direct funds you're not losing any money at all. So it's not a bad practice to get the performance ranking from the broker based sites and then investing directly. Many people do that and there is no issue with such with the rankings.

Rankings from any platform is an indication of how the fund is performing over the specific period of time. And no fund house wants to show their fund in poor performance. I suggest you to continue investing but instead of relying on CRISIL try reading other sources. For example there is one article on freefincal.com that shows how to choose the right mutual fund for yourself. That method is more effective than choosing the fund using CRISIL ranking alone.





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