Honouring the Best in Business

In volatile times, the focus is on investing in the right instruments, say experts at the Money Today award ceremony.

By Team BT  
Monday, April 2, 2018

The stock market has been quite volatile of late largely due to global pressures, be it the US raising import duty on steel and aluminium or concerns over North Korea. But institutions went out of the way to ensure that the financial health of individuals was protected to a large extent.

The Money Today Financial Awards identified the best in mutual funds, insurance and pension funds. The three sectors have seen phenomenal growth after liberalisation and they are expected to show double-digit growth figures for many years. The fifth edition of the Money Today Financial Awards featured a total of 17 awards. Of these, there were eight awards for mutual funds, six for the insurance segment and three for pension funds. Last year, we also added three new categories under insurance - Best Motor Insurance Provider, Best Term Insurance Provider and Best ULIP Policy. Value Research was the knowledge partner for identifying the winners in mutual funds and pension funds segments while Policybazaar identified winners in the insurance sector.

The Chief Guest for the event was former SEBI Chairman G.N. Bajpai who initiated numerous reforms and innovations. Under his leadership, LIC became a financial powerhouse with the largest asset base in the Indian subcontinent.

Prosenjit Datta, Editor, Business Today and Money Today, said that with the government announcing a slew of policies to provide health and other insurance covers to poorest citizens, there is a huge potential opportunity for the insurance industry.

The awards ceremony was preceded by a panel discussion on 'Where to invest in 2018'. During the discussion, experts said that the stock market would be volatile this year. "You have to have a two-three year time horizon to get returns from the market," said Vikram Kotak, Managing Partner of Crest Capital. Yashish Dahiya, CEO and co-founder of Policybazaar, made a strong case for buying ULIPs as the prices are extremely attractive compared to mutual fund schemes. Gulam Zia, Executive Director at Knight Frank, talked about the difficult phase that the realty market underwent post GST and RERA. "The revival will take a very long time," he said.

The awards were sponsored by ICICI Direct.

How We Did It

Mutual Funds: The methodology for selecting the winners in the mutual fund category was developed in consultation with our knowledge partner Value Research. The fund rating score (risk-adjusted rating), given to each fund by Value Research, was derived by deducting the fund's risk score from its return score. Based on the fund rating scores, the top 10 per cent funds in a given category were awarded a five-star rating while the next 22.5 per cent funds got a four-star rating. The middle 35 per cent of the funds were given a three-star rating and the next 22.5 per cent funds got a two-star rating. The bottom 10 per cent of the funds in the category got a one-star rating.

To select a winner in each segment, we identified a fund house with the highest percentage of top-rated funds (four stars and five stars).

Various fund categories considered for the equity fund awards included large-cap, multi-cap, mid-cap, small-cap and tax-planning funds. For the debt fund awards, the categories under consideration were income funds and gilt funds (medium and long-term).

In the debt category, only the mainstream fixed-income categories available for medium-to-long-term investment for retail investors were considered. Although the dynamic bond funds qualify under this criteria, they could not be considered due to insufficient track records.

To select the winners in the long-term categories, both for debt and equity and overall, the evaluation was done on the basis of their five-year rating scores. To identify the winners in short-term categories, the top five fund houses (by three-year scores) were sorted by their one-year risk-adjusted scores.

Insurance: A wide range of parameters was considered to select the winners in life, general and health insurance categories. These included customer service and satisfaction, size and scale, business growth, financial strength, and prudence and performance in terms of regulatory compliance. The methodology for the three categories was the same as last year. Policybazaar was our knowledge partner for the insurance category.

Just like last year, we focussed on the three categories, namely, term insurance, motor insurance and unit-linked insurance plan. Based on claims ratio, new business, persistency, claim settlement turnaround time (average in each quarter, 15 per cent), cost per lakh and product features, we selected the Best Term Insurance Provider of the Year. The emphasis was on three major areas - business growth, product strength and customer satisfaction. Under business growth, new business growth was included, which gauged how an insurer performed compared to its competition.

Another important parameter was settlement turnaround time or TAT. It underlines how efficient an insurer is in settling claims. Similarly, claims ratio was also evaluated as it reflects how good or bad an insurer is with its underwriting. Cost is another key determinant for a price-sensitive market like India. Therefore, the cost-per-lakh parameter was considered to show how cost-effective the plans were.

Several important features of a term plan such as benefit payout options, riders, coverage offered, premium paying term, policy term and in-built facilities enhance the product strength. The more feature-rich an insurance plan is, the more likely it is to meet the diverse requirements of its customers.

To select the Best ULIP Policy of the Year, two core areas - product performance and product strength - were evaluated. The first-year-linked-premium criteria gave a clear insight into product performance compared to one's competitors. To gauze the three-year fund performance, the performance of blue-chip funds or funds investing in large-cap companies were considered to have a uniform comparison of how investments in these products had performed over a three-year period.

Pension Funds: In the Pension Fund category, we had three awards - Equity Pension Fund of the Year, Government Bonds Pension Fund of the Year and Corporate Debt Pension Fund of the Year. Value Research was our knowledge partner and helped us select the winners based on three years' annualised returns of Tier I funds in different categories.

The cutoff date was March 31, 2017.

 

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