I post a fund reviews from time to time in order to showcase the capabilities of my Excel sheets to new readers. The focus in these posts is on how to review/analyze a fund rather than the results of the review. The fund chosen is just an excuse.

In this case, it is Edelweiss Absolute Return Fund. This is an equity-oriented balanced fund or hybrid fund. Its main aim is to reduce the volatility in NAV movement, but at the same time aim for capital appreciation by using a wide variety of instruments:

Equity and equity-related instruments like derivatives, arbitrage opportunities, stock lending, option premium, interest swaps, foreign securities, bonds, money market instruments and securitised debt (whew!)

In spite of all this, it is considered as a high risk fund (brown color code) but is curiously benchmarked to CRISIL MIP blended index which is a debt oriented folio (15% Nifty+85% CRISIL composite bond index)

Naturally the expense ratio of such a fund will be high.

In what follows I compare the performance of the fund with Nifty (because I suspected that it would have done well wrt this) using the

We will be using metrics likeUlcer indexand Capture ratio. Please refer to these posts for more details:

Simplify Mutual Fund Analysis with Upside/Downside Capture Ratio

First a look at the risk-adjustedreturn with multiple metrics. The fund has done quite well.

Now the SIP and lump sum returns (click to enlarge)

This a pretty good showing. The fund has managed to match or even beat the Nifty by taking lesser risk. The best way to visualize that is by looking at the normalized NAV movement along with the Ulcer index (a measure of downside risk)

The Ulcer index of the fund (blue line) is well below that of the index (burgundy line) and is a lot less volatile. Notice how smooth the NAV has increased (green) compare to the index (purple).

The capture ratio of the fund (upside capture divided by downside capture) is also well above the index. This is an impressive record.

Now let us compare this fund with a solid traditional balanced fund like HDFC balanced.

A consistent score of less than 50% implies that Edelweiss Absolute Return Fund has not done well compared to HDFC balanced on risk-adusted basis. The returns also reflect this (click to enlarge).

HDFC balanced has returned significantly more.

However, the higher returns of HDFC balanced has come with significant volatility as seen by higher ulcer index (burgundy).

Have a look at the 5 year rolling returns of both funds. HDFC balanced is superior.

That said, if I had to choose a fund for a goal between 5-10 years, I will use Edelweiss Absolute Return fund and not HDFC balanced.

HDFC balanced is simply too volatile for less than 10Y durations.

Do not make the mistake of usingEdelweiss Absolute Return fund for short-term goals (1-3Y). Both funds are too volatile for such time periods.

The returns will be too volatile for short durations.

At the same time, this fund is too conservative to be suitable for long-term goals (10Y+).

Verdict:Suitable forintermediate-term financial goalswith adequate (separate) debt exposure.

Create a from start to finish financial plan with this unique open-source robo advisory software template

Dont like ads but want to support the site? Subscribe to the ad-free newsletter!

You will get the full post-ad-freedelivered to your inbox for Rs. 3000 a year.

Follow this link to read the terms and sign up!

You can be rich too with goal based investing

as he is popularly known, publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis, including a robo advisory template for use by beginners.

freefincal at Gmail dot com He conducts free money management sessions for corporates (see details below). Previous engagements include

Freefincal has original unbiased, conflict-of-interest-free, topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one.

We do not accept sponsored posts and link exchange requests from content writers and agencies

. The revenue from the advertisement willonly be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.

Want to conduct a sales-free basics of money management session in your office?

I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail[dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

You Can Be Rich Too with Goal-Based Investing

My first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle!

Gamechanger: Forget Startups, Join Corporate &

My second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost!

This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.

All calculators from our book, You can be Rich Too are now available on Google Play!

Install Financial Freedom App! (Google Play Store)

Install Freefincal Retirement Planner App! (Google Play Store)

Find out if you have enough to say FU to your employer (Google Play Store)

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism anddiffering opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

Risk Aversion Almost Always Implies Risk Ignorance!

Sir, I think Edelweiss Absolute Return Fund should be compared with Icici Pru Balanced Advantage.

Yes, I see what you mean. I dont think results will be any different. This fund has higher arbitrage and other exposure than ICICI balanced.

Sir, I was referring to I Pru Balanced Advantage. According to Morningstar it has effective exposure of 39% to equities currently.

But I have not looked into the investment strategies of both the funds. So will not be able to comment on arbitrage exposure.

Sir, I think Edelweiss Absolute Return Fund should be compared with Icici Pru Balanced Advantage.

Yes, I see what you mean. I dont think results will be any different. This fund has higher arbitrage and other exposure than ICICI balanced.

Sir, I was referring to I Pru Balanced Advantage. According to Morningstar it has effective exposure of 39% to equities currently.

But I have not looked into the investment strategies of both the funds. So will not be able to comment on arbitrage exposure.

Whats the impact of Sharpe Ratio. Can you illustrate in this analysis

Sharpe ratio is best calculate wrt the funds benchmark. You can calculate it using the risk-return analyser and check for outperformance. I dont remember the values for this fund.

Whats the impact of Sharpe Ratio. Can you illustrate in this analysis

Sharpe ratio is best calculate wrt the funds benchmark. You can calculate it using the risk-return analyser and check for outperformance. I dont remember the values for this fund.

after attending your delhi workshop and reading this blog, i started using more features in it. i downloaded 15 oct 2014 mf portfolio tracker. i am unable to use it because:-

i have purchased FI prima fund g -direct on 13.03.2014 for 10000/- and then started SIP wef 20 jul 2014 for 4000/-.

now if i go to input file and put 13.03.2014 in step 5 and 20.07.2014 in step 7 then 4000 get invested on 13.03.2014 and then every month on 20 or later (if 2o is holiday) wef jul 2014, because there is no place to add amount 10000/- in input sheet.

if i put 21.07.2014 which is first SIP tx date (as 20 sep was holidy) in step 5 and 20.07.2014, then system warns that it is not permitted.

if i put 21.07.2017 in both step 5 & 7, all SIPs hapen on 21st instead of 20th.

after attending your delhi workshop and reading this blog, i started using more features in it. i downloaded 15 oct 2014 mf portfolio tracker. i am unable to use it because:-

i have purchased FI prima fund g -direct on 13.03.2014 for 10000/- and then started SIP wef 20 jul 2014 for 4000/-.

now if i go to input file and put 13.03.2014 in step 5 and 20.07.2014 in step 7 then 4000 get invested on 13.03.2014 and then every month on 20 or later (if 2o is holiday) wef jul 2014, because there is no place to add amount 10000/- in input sheet.

if i put 21.07.2014 which is first SIP tx date (as 20 sep was holidy) in step 5 and 20.07.2014, then system warns that it is not permitted.

if i put 21.07.2017 in both step 5 & 7, all SIPs hapen on 21st instead of 20th.

Absolute Return Fund does nt change the long only equity position unlike the Pru Balanced Advantage fund ,instead it do dynamic hedging to manage risk/downside

Absolute Return Fund does nt change the long only equity position unlike the Pru Balanced Advantage fund ,instead it do dynamic hedging to manage risk/downside

They are back on now. Thanks for letting me know.

Am from Gangtok in Sikkim. Long back over 7-8 years now, an Edelweiss representative, tells me to invest in Edelweiss assuring me their indepth knowledge and expertise in managing money with their meticulous plans I said fine and put in Rs 10000 and another Rs 5000 as well later. In the interim period I started reading about Edelweisss expertise in money management on their websites that is filled with fancy words and other high sounding words I thought they are great people with great knowledge. In between I kept getting emails from Edelweiss which I didnt read in detail thinking experts are on the job

After those many years I got curious as to how my money must have grown with those experts. They tell me my 15000 has become Rs 2667 which they had to put in my bank account as they didnt want to see it becoming even less. I couldnt help but smile at their expertise and their indepth knowledge and capabilities and just wonder how many others go through such knowledgeable experts

Your email address will not be published.Required fields are marked*

Create a start to finish financial plan with the freefincal robo advisory template

Create your own financial plan with this financial planning template

What we can learn from Petrol, Diesel historical price inflation data

Do not expect returns from mutual fund SIPs! Do this instead!

Do Not Invest Rs. 50,000 in NPS for additional tax saving benefit in 2019!

This will change the way you invest: S&P Index Versus Active Funds report

A mutual fund need not declare NAV after each business day!

DHFL Crisis: How to handle your debt mutual funds now?

Nifty Momentum Timing: Can it produce higher returns?

Revised EPS Pension Calculator: How much will my EPS Pension increase?

Guide to efile Income Tax Return: ITR2, ITR3 and ITR5

Guide to efile Income Tax Return For AY 2018-19

Create a start to finish financial plan with the freefincal robo advisory template