Putting F-Score and G-Score together to arrive at M-Score

Mastering Mutual Fund Investment: Part 3 of 3 Putting F-Score and G-Score together
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Transcript

In the previous two sections we studied about f score and G score, we found out how to find the F score of our individual value stock and also how to find the G score for individual growth stock. Then we found that for a mutual fund, how to take all the value stocks find the F score and come to a number which can be considered the F score for the mutual fund. Similarly, we found how to calculate the G score for an individual growth stocks of a mutual fund and come to a single number which can be considered as the G score for the mutual fund. Now in this section, we will see how to put the F score a G score together, we will define a new number called m score the mutual fund score which will be the combination of the F score and Z score of the mutual fund.

The mutual fund which we're studying as an example was Aditya Birla sunlight pure value fund. Now for this fund, we had found out the top 10 stocks which we add the holdings of this mutual fund and also we found out what are the allocations Of these top 10 stocks, we have seen that the top the top 10 stocks allocation to all put together was credit 7.48%. Now, we had found out which of these top 10 stocks are value stocks and which are the growth stocks. This analysis we have already completed. We are then taken the value stocks separately, we found that 10.85% was the total allocation of the value stocks along the top 10 stocks whose contribution was 27.48%. So, the weight of the value stocks worked out to be 39.48%.

Then we found the F score of each of the value stocks and we arrived at our F score for the mutual fund does 0.546 now, we multiply the F score 0.546 with a weight of 39.48% to arrive at a number point 216. Then we do the same exercise for the growth stocks, we found that the growth stocks allocation was 16.63%. So 16.66% of 27.48% gave the growth stocks a weight of 60.52% then we calculate the G score for each of the growth stocks and got the numbers, then we from the numbers of the D score, we found the contribution of each of the growth stocks and then added other contributions to arrive at a number point 6663. So this was the G score for the mutual fund. Then, point 6663 we multiplied by the weight 60.5 to arrive at a number called z 4032. Our objective was to come to a single number, which we can use use for comparing different mutual funds.

Now, we will call this number as M score the mutual funds code. Now we take the value stocks, we find that the value stocks f score is point 5460 and The weight is 39.48% multiplying the F score with the weight, we get point 2155. Similarly, for the growth stocks you found the G score is point six, six is three, and the weight is 60.52%. multiplying these two we find the number is point 4032. Now we can add the contributions of value stocks and growth stocks to arrive at a number point 6187. So this will be the EMS code for the mutual fund.

We will use this number 16187 and against the same number for other mutual funds to see which one is a better mutual fund. With that, we come to the end of this section. Thank you for listening. See you in the next section.

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