Curious about the Mutual Fund Selection Process in Moduit? Let's Find Out!

Hi Moduers,

In this article, we would like to discuss about the Mutual Fund selection process in Moduit.

Prior to our discussion, have you ever heard from your parents that it is important to consider various factors before choosing your partner? Similarly, Moduit is very careful in choosing Investment Manager partner and Mutual Fund products to be offered in the platform. The selection is done by considering many factors and assessment that is done through PRIME Model analysis.

 

The PRIME Model analysis is invented by Moduit Product Team based on more than 15 years of experience in investment product management. As such, PRIME Model consists of 5 following aspects:

  • Performance Persistance

Moduit emphasizes on the importance of Mutual Fund performance persistency as compared to their respective benchmark. Mutual Fund performance analysis is done not only by looking at one specific period, but different periods. This analysis is used to check on the consistency and persistency of the Mutual Fund performance in various market conditions.

  • Risk Ratio

Other than analysing the persistency of Mutual Fund performance, another important factor that needs to be analysed is certainly risk factor. Risk analysis is performed by comparing different ratios, such as Sharpe ratio, Jensen ratio and Treynor ratio. These ratios serve different purposes. Sharpe ratio is used to measure the efficiency of certain Mutual Fund to reach the return based on its risk and is calculated by comparing between the Mutual Fund risk and return. Likewise, Treynor ratio is also calculated by comparing risk and return of certain Mutual Fund. Moreover, Jensen ratio compares the return of Mutual Fund with risk free assets.

  • Invested asset under management

Total invested asset under management of certain Mutual Fund product is also an important factor as it could affect the liquidity of the fund while managing the portfolio. However, this does not mean high amount of asset under management is the only factor to be considered, the growth of the asset under management and diversification of the portfolio also need to be analyzed so that Mutual Fund performance is more resilient in the case where there is significant withdrawals from the main portfolio holder of the specific Mutual Fund.

  • Management Team

A good Investment Manager has to have appropriate license and team with excellent experience and track record in Mutual Fund management. In addition, a good Investment Manager needs to also have principle that prioritize customer’s interests in managing the fund invested by customers.

  • Expense Ratio

Expense ratio is the cost that is charged to Mutual Fund, such as administration, brokwe, custodian bank selling agents, consultant fees and others that are needed to Mutual Fund management. These costs are calculated in Net Asset Value (NAV) of the Mutual Fund. Lower expense ratio means the Mutual Fund is managed in a more efficient way,

 

The main purpose of implementing strict process for Investment Manager and Mutual Fund product selection is to give the best product selection for Moduers and so that Moduers could feel safer while investing according to the financial goals, investment tenor and risk profiles.

 

So what are you waiting for? Let’s invest in Moduit!

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