rating agency icra

8/8/2019 Rating Agency Icra

http://slidepdf.com/reader/full/rating-agency-icra 1/16

By:

Group members



ICRA Limited (formerly Investment Information and Credit Rating

Agency of India Limited) was set up in 1991 by leading

financial/investment institutions, commercial banks and financial

services companies as an independent and professional Investment

Information and Credit Rating Agency.Today, ICRA and its subsidiaries together form the ICRA Group of

Companies (Group ICRA). ICRA is a Public Limited Company, with its

shares listed on the Bombay Stock Exchange and the National Stock

Exchange



Rating ServicesGrading Services

Consulting Services

Software Development, Business Intelligence and Analytics and

Engineering Services

Knowledge Process Outsourcing and Online Software



A mutual fund is a legal vehicle that enables a collective group of individuals to:

1).Pool their surplus funds and collectively invest in instruments /assets for a common investment

objective.

2). Optimize the knowledge and experience of a fund manager, acapacity that individually they may not have

3). Benefit from the economies of scale which size enables and isnot available on an individual

basis.



Return Analysis

Portfolio Analysis

Liquidity

Corpus Size

Average MaturityPortfolio Turnover



Risk adjusted return has been calculated on the basis of ³Investor

Expectation Ratio´(ratio of excess return and risk).

The excess return is the average daily active return of the scheme

calculated for the ranking period over the average peer group return.

Average peer group return has been taken as the proxy for the

expected return.Higher the risk premium per unit risk, better it is.

In the case of Index Schemes, the Return Analysis has been done on

the basis of Tracking Error. Lower the tracking error, better it

is. (Tracking errors are reported as a "standard deviation percentage"difference. This measure reports the difference between the return an

investor receives and that of the benchmark.)



MF schemes that do not have an adequately diversified portfolio carrya higher risk than well-diversified schemes.

For equity schemes, company concentration has been considered,sector concentration has been evaluated for debt schemes.

Company concentration has been judged taking NSE NIFTY as the

benchmark to decide the overexposure in any of the scrips in the portfolio.

For debt schemes, the sectors that have been considered are Gilt; Non-Banking Financial Companies, Manufacturing Companies,Banks/Financial Institutions/Development Institutions, and Non-

Financial/Non-Manufacturing Companies. Overexposure to any of these sectors has been penalized.



The liquidity coefficient for a scheme is calculated as the weighted

average of the liquidity coefficients of all scrips in the portfolio.

The liquidity coefficient of a scrip is calculated as the total number

of shares in the portfolio of the scheme divided by the total daily

turnover of the scrip. Schemes with higher liquidity have been

preferred.



Since a larger size of the scheme's corpus lends stability to an MFscheme during periods of high redemption pressure, preference has

been accorded to large-size schemes.



Average maturity has been considered in the case of Debt,

Gilt and Liquid categories. Schemes with higher averagematurity carry higher interest rate risks as compared withschemes with lower average maturity. Lower average maturityhas been preferred.



Schemes with low portfolio turnover have been preferred over

ones with higher portfolio turnover.

rating agency icra

Documents