Ever wonder how risky a Mutual Fund or ETF is? Your financial advisor is convinced that it is the best fund for your portfolio but how does it compare versus its peers?
Arguably, the simplest measure of risk is price volatility. The more volatile the price, higher the risk. Surely it must be easy to compare volatility across funds and market indices like the S&P 500? It is with RADiENT.
For example, my financial advisor recommended Fidelity Growth Company Fund - FDGRX ‒ the returns seem promising but is it more or less risky than the S&P 500 index? Or is there another fund with similar returns but less risk?
I looked through several sites including Morningstar, Bloomberg and Yahoo Finance but with no luck. Most financial sites have a ton of information and comparisons for fund performance but no risk metrics. I was surprised at how difficult it was to analyse both fund performance and volatility.
To tackle this, we designed RADiENT, an industry leading hedge fund analytics platform, using cloud technology. Data science techniques such as artificial intelligence and machine learning allow us to grab performance data from various sources including benchmark returns, and consequently utilise the same to calculate and chart metrics at rocket speed on the fly. But was using RADiENT like using a fighter jet to cross the street?
RADiENT is now tuned for Mutual Funds and ETFs with a simplified interface and available to everyone - for free.
To see RADiENT in action, navigate to our Dashboard and type FDGRX in the search box. Selecting the fund takes you directly to our Analysis page with all the charts and metrics you'll need.
On the top left, click on "Select Comparison" and pick a benchmark like the S&P 500 and another similar growth fund, say BlackRock Focus Growth Fund - MDFOX.
Select the time period for which you'd like to compare performance ‒ either the predefined time buckets such as 1Y, 3Y, 5Y or a specific date range. Lastly, pick if want Daily, Weekly, or Monthly charts. Monthly is a good choice for longer time periods as it smooths out the noise of daily moves. For the graph below I selected 5Y and Monthly.
It turns out that while Fidelity's FDGRX has significantly better returns than the S&P 500 over the last 5 years, it is notably more volatile (hence, more risky). However, compared to a fund like BlackRock's Focus Growth MDFOX, it underperforms slightly and is, again, more volatile! The metrics suggest that MDFOX is the better fund (higher return with lower risk) so might merit more investigation or an informed conversation with your financial adviser.
We have over 5,000 mutual funds and ETFs on the platform and that number is growing quickly. So research your favorite funds and compare them versus each other and against market benchmarks.
Sign up for an account (it’s free) and begin setting up your portfolios to track their performance metrics.
If you love it, spread the word! Tell everyone on LinkedIn, and on Twitter... and then tell your family, friends, neighbors and co-workers.
And if you don't, talk to us. We would love to get feedback on how can we make it better.
