How reliable are CRISIL ratings to invest in mutual funds

Crisil is one rating agency which everyone has heard of. This is mainly because it finely rates a wide array of debt instruments such as bank loans, commercial paper, asset backed securities, bonds, guarantees etc. Because of this reason, ratings by Crisil have been heavily relied on by investors as well as by lenders for their internal evaluation process, before they go out to make an investment.

Crisil ratings are known to be well established and are considered to be one of the most important benchmarks. If we talk about mutual funds here, then we can suggest that Crisil Ratings may be good enough because unlike other rating agencies, Crisil manages to describe all the variables in their rating methodology description.

Just a brief that we would give her about Mutual fund rating – this is the best way to judge a Mutual Fund, and coming over to the ranking, Crisil is one of the best in case of Mutual funds. Why these rankings are necessary is because they are a good selling point for Mutual fund distributors to sell their products. So if you talk about reliability, yes we would say that Crisil ratings are the most reliable to judge a direct mutual fund platform.

Talking about how selecting mutual funds only on the basis of the ratings, given by Crisil or any other rating agency, may not be such a good decision. This is because even if it may look like a good investment at one point of time in life, but after a period of time, it may or may not be the same. The market is said to be pretty volatile. There are some other factors which also should be kept in mind while rating mutual funds.

Firstly, you need to know how the fund has performed in the last 3-5 year period. If it’s giving out consistent returns, plus it has a good rating, then you can say that investing in this fund may be a good decision. Apart from that, you should be able to check how volatile the fund schemes have been, as it is said that more volatile schemes generate better returns, but you also need to see the consistency and ratings of it too. After that comes the liquidity check and then comes the quality control. Try not investing in funds whose credit quality is not that high.

So, you need to know as well as consider all these factors while you go with the Mutual fund ratings provided by Crisil, or be it any other rating agency. Not only will it help you in having a healthy portfolio, but also the risk involved will be way less in this case. So, if we talk about reliability here, and if it means analyzing the funds past on the past performance as well as its quantitative metrics, then Crisil is pretty reliable.

Lastly, you need to know that the ratings which are given by credit rating agencies are usually set on some pre parameter. What happens is that they charge the companies which provide ratings for accessing them as well as for providing the ratings. Also, all the data which has been given by the mutual funds, is usually open to the public domain.

Thus, all in all, in terms of reliability and trust, Crisil is said to be one of the best rating agencies, not only in terms of mutual funds but in other domains as well. So, to answer the question, Crisil is highly reliable as it follows all parameters needed to be followed.

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