2002 Publishers Open Forum

Disclaimer

January 21, 2002
New Orleans, La.


Mutual Funds Information: A Product Review

Value Line Investment Survey


Reuben Gregg Brewer
Manager of Mutual Funds Research
Value Line, Inc.



Questions

1) If you rate mutual funds, what are your criteria?
2) How do you choose them?
3) How far back does the rating go?
4) What format do you use?
5) What are the features for exporting the data?
6) Do you provide NAVs?
7) Do you provide risk measures?
8) How does the product address ratings over time?
9) Do you provide total returns?
10) Do you provide tax adjusted returns?
11) Do you provide load adjusted returns?
12) Do you provide all this data for all companies or just a percentage of them?
13) Is it survivor bias free?
14) How do you evaluate? What criteria do you use?
15) Who do you view as your audience?


1) If you rate mutual funds, what are your criteria?

The Value Line ranking system is materially different than most on the market. We look not only at performance, but also at growth persistence—a proprietary Value Line measure that rewards funds for the consistency with which they outperform their peers regardless of the magnitude. Our Overall Rank combines 3-year risk-adjusted performance, 1-year Growth Persistence, and 5-year growth persistence. Once a composite score is created, the funds are organized from highest score to lowest and a bell curve is used to assign rankings from 1 to 5. One is the highest and comprises the top 10% of all funds, 2 covers the next 20%, 3 the next 40%, 4 the next 20%, and 5 the remaining 10%. There is only one rank; we do not provide rankings of this type for different time periods.

Value Line also provides a Risk rank that is based on three-year standard deviation. For this rank, funds are organized form lowest standard deviation (less risk) to highest and the same bell curve is used to assign ranks.

In addition to these ranks, Value Line provides proprietary Manager Rating. This rating, used by Barron's in its annual review of managers, is a risk adjusted relative performance measure for a manager's tenure. Higher scores are better than lower or negative numbers.

Value Line also provides the more customary percentile ranks versus Objective group that many services provide, as well as calendar year ranks and investment style related rankings.

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2) How do you choose them?

Value Line selects funds for full-page coverage based on a number of different criteria. Some factors include fund size, popularity, performance, and investment niche. It is important to note, however, that we rank every eligible fund in our database. A fund is eligible for ranking if it has at least three years of performance.

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3) How far back does the rating go?

As discussed in question one, Value Line's Overall Rank does not cover varying time periods.

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4) What format do you use?

Value Line provides its mutual fund research in three formats: Print, CD, and on the Internet. The print and CD subscribers have complete access to the Value Line Mutual Fund Research section of the Value Line Web site, no extra fees are required. All of the subscription methods allow users to access Value Line's full-page reports.

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5) What are the features for exporting the data?

Assuming that this relates to the CD version of The Value Line Mutual Fund Survey, the entire database can be exported. This includes historical yearly data for information such as turnover and expenses, current portfolio characteristics and performance numbers, and historical NAVs.

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6) Do you provide NAVs?

Yes, monthly NAVs are provided in the CD product.

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7) Do you provide risk measures?

Yes, we provide not only Value Line's overall Risk Rank, but also market portfolio theory numbers. These include beta, standard deviation, alpha, Sharpe ratio, and R-squared.

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8) How does the product address ratings over time?

Value Line's ranks change on a monthly basis, and we do not publish historical rankings. We do, however, provide both trailing and calendar-year ranks versus objective groups.

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9) Do you provide total returns?

Yes Value Line provides total return numbers.

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10) Do you provide tax adjusted returns?

We currently do not provide tax-adjusted returns. Value Line has, though, provided the dollar amount of taxes over the fund's trailing history since our service began almost 10 years ago. Essentially, an investor can see what the actual dollar amount of taxes would have been had he or she invested $10,000 in the fund.

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11) Do you provide load adjusted returns?

Value Line does provide load-adjusted returns.

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12) Do you provide all this data for all companies or just a percentage of them?

Value Line provides data for all funds we cover, however, only those mutual funds in the print product receive text reviews.

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13) Is it survivor bias free?

No, the service is intended for investors seeking new investments. As such, it is not appropriate to continue coverage of funds that have closed.

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14) How do you evaluate? What criteria do you use?

Value Line bases its mutual fund reviews on a number of factors, including risk, performance, and manager interviews, with ultimate goal of suggesting what type of investor, if any, might be interested in owning a fund. We recommend that investors use an asset allocation framework when constructing their portfolios and, thus, believe that funds should not be evaluated only on performance.

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15) Who do you view as your audience?

The Value Line Mutual Fund Survey, in all forms, is designed to help investors select good mutual funds. This may come in the form of an individual investor or a financial planner. We have attempted to provide a product that offers tools that can be used by technically savvy investors, such as investment professionals, or less sophisticated investors, such as many individual investors. There is something that everyone can use.

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BRASS Business Reference Sources Committee

bulletPublishers Open Forum
ALA Midwinter Conference, January 21, 2002



Disclaimer : This publication has been placed on the web for the convenience of BRASS members. Information and links will not be updated. Posted 16 August 2002.