CRISIL's mutual fund ranking for the quarter ended March 2014 shows short-term debt categories delivering the highest returns. Debt funds are represented by four unique indices - the CRISIL - AMFI Short-Term Debt Fund Performance Index, the CRISIL - AMFI Money Market Fund Performance Index, the CRISIL - AMFI Income Fund Performance Index and the CRISIL - AMFI Gilt Fund Performance Index.

''A much-touted investment maxim says long-term investments yield higher than short-term, but elevated interest rates of the last three years have inverted the thesis. In this period, yields on 10-year government security increased from 7.98% to 8.80%, peaking at 9.23% in December 2013. On the other hand, the 1-year certificate of deposit yielded 9.37% on an average over the same period - helping short-term debt schemes which typically follow an accrual strategy in times of rising interest rates. Long-term debt funds, on the other hand, were impacted by mark-to-market losses,'' said CRISIL Research.

In the 3 year period, returns from short-term categories were higher by 1.5% to 3.1%, with money market funds delivering the most.

''For the March quarter, Birla Sun Life Mutual Fund and UTI Mutual Fund led the tally by having seven funds under CRISIL Fund Rank 1, followed by ICICI Prudential Mutual Fund with six and SBI Mutual Fund with five. The quarterly ranking covers 17 categories across equity, debt and hybrid funds in the mutual fund industry. Unlike assessments based on returns or net asset value (NAV), the CRISIL Mutual Fund Ranking uses a combination of NAV and portfolio-based attributes to evaluate. It is, therefore, a one-stop comprehensive analysis that considers key parameters such as risk-adjusted returns, asset concentration, liquidity, asset quality and size.''

''The rankings also include categories that focus specifically on long-term consistency in performance. The ranks are assigned on a scale of 1 to 5, with CRISIL Fund Rank 1 indicating very good performance. In any peer group, the top 10 percentile of funds are ranked as CRISIL Fund Rank 1 and the next 20 percentile as CRISIL Fund Rank 2,'' it added.

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