grok says, calucating best among 3y,5y,10y results.
Ranking mutual fund (MF) schemes based on 3 results (e.g., 3-year, 5-year, and 10-year returns) is a common practice in investment analysis. The "best" method depends on your goals (e.g., short-term gains, long-term stability, risk tolerance), but here are general and widely accepted approaches, followed by a calculation example using your data:
### General Methods to Rank Mutual Funds
1. **Simple Average Ranking**:
- Calculate the average return across the 3 periods.
- Rank funds based on the average.
- Best for: A balanced view without weighting.
- Formula: \(\text{Average} = \frac{\text{3-yr} + \text{5-yr} + \text{10-yr}}{3}\)
2. **Weighted Average Ranking**:
- Assign weights to each period based on importance (e.g., 40% to 3-yr, 30% to 5-yr, 30% to 10-yr).
- Rank funds by the weighted average.
- Best for: Customizing based on investment horizon (e.g., higher weight to recent performance).
- Formula: \(\text{Weighted Average} = (w_1 \times \text{3-yr}) + (w_2 \times \text{5-yr}) + (w_3 \times \text{10-yr})\), where \(w_1 + w_2 + w_3 = 1\).
3. **Composite Score with Normalization**:
- Normalize returns (e.g., convert to z-scores or rank within each period).
- Sum or average the normalized scores.
- Rank funds by the total score.
- Best for: Comparing funds across varying return scales.
4. **Risk-Adjusted Ranking (e.g., Sharpe Ratio)**:
- Calculate risk-adjusted returns (e.g., Sharpe Ratio = \(\frac{\text{Return} - \text{Risk-Free Rate}}{\text{Standard Deviation}}\)).
- Rank funds by the highest ratio.
- Best for: Accounting for volatility and risk.
5. **Combined Ranking Method**:
- Rank funds separately for each period (1st, 2nd, 3rd, etc.).
- Sum the ranks and sort by the lowest total rank.
- Best for: Consistency across periods.
### Recommended "Best" Method
The **Combined Ranking Method** is often considered the most robust for general use because it:
- Highlights funds with consistent performance across all periods.
- Avoids bias from extreme returns in one period.
- Is simple to calculate and interpret.
### Calculation Example Using Combined Ranking
Using your data (average returns) and the combined ranking method:
- Rank each fund for 3-yr, 5-yr, and 10-yr returns separately.
- Sum the ranks and rank the total.
| Fund | 3-yr (%) | 5-yr (%) | 10-yr (%) | 3-yr Rank | 5-yr Rank | 10-yr Rank | Total Rank | Final Rank |
|------|----------|----------|-----------|-----------|-----------|------------|------------|------------|
| 1 | 19.06 | 27.18 | 14.28 | 1 | 1 | 2 | 4 | 1 |
| 2 | 18.43 | 22.88 | 11.78 | 2 | 5 | 10 | 17 | 3 |
| 3 | 17.08 | 25.25 | 14.17 | 4 | 2 | 3 | 9 | 2 |
| 4 | 16.31 | 24.53 | 12.79 | 6 | 3 | 6 | 15 | 4 |
| 5 | 15.78 | 22.49 | 13.00 | 8 | 6 | 5 | 19 | 5 |
| ... | ... | ... | ... | ... | ... | ... | ... | ... |
- **Steps**:
1. Sort 3-yr returns: 19.06 (1), 18.43 (2), 17.08 (3), etc.
2. Sort 5-yr returns: 27.18 (1), 25.25 (2), 24.53 (3), etc.
3. Sort 10-yr returns: 14.28 (1), 14.17 (2), 12.79 (3), etc.
4. Sum ranks: Fund 1 (1+1+2=4), Fund 3 (4+2+3=9), etc.
5. Rank by total: Lowest total = best.
- **Result**: Fund 1 ranks 1st, Fund 3 ranks 2nd, etc.
### Conclusion
The combined ranking method is a solid choice for identifying the "best" funds based on consistency. If you prefer emphasizing recent performance (like your 963 method), adjust weights accordingly. For a more precise analysis, I can calculate this for all 23 funds or incorporate risk data if available. Would you like me to proceed?
