Methodology, Formulas & Survivorship-Bias Policy
Full transparency into how The Ark Wealth Builders computes risk-adjusted metrics, handles AMFI daily NAV lags, treats IDCW payouts and scheme mergers, and mitigates survivorship bias across 13,461 mutual fund schemes.
1. Return & Risk Ratio Formulas
Compound Annual Growth Rate (CAGR) & SIP XIRR
Point-to-point CAGR is computed strictly from daily AMFI NAV observations over exact calendar days (1Y, 3Y, 5Y, and Since Inception). For irregular or monthly SIP cash flows, effective annualized return uses XIRR, and forward calculators convert annual CAGR to monthly rates via (1 + CAGR)^(1/12) − 1.
Rolling Returns (1Y, 3Y & 5Y Windows)
Evaluated across all available trailing business-day windows of length W (252, 756, or 1,260 NAV observations) rather than a single lucky end date. Outputs report median, minimum, maximum, and consistency across market cycles.
Sharpe Ratio (Total Volatility Efficiency)
Measures annualized excess return above an Indian sovereign T-Bill / G-Sec risk-free proxy of 6.50% p.a. per unit of annualized daily return standard deviation (σ_p × √252). Penalizes both upside and downside fluctuations.
Sortino Ratio (Downside Risk Efficiency)
Measures annualized excess return above the 6.50% Minimum Acceptable Return (MAR) divided by annualized downside semivariance (computed exclusively from daily observations falling below the daily MAR threshold). Upside rallies are not penalized.
Maximum Drawdown (MDD) & Calmar Ratio
Maximum Drawdown captures the largest peak-to-trough percentage decline across the scheme’s observable daily NAV series, paired with recovery duration in days. Calmar divides 3-year annualized return by absolute drawdown.
2. AMFI Data Sourcing, Sync Cadence & Known Data Lags
AMFI publishes domestic mutual fund NAVs after Indian market close (typically 9:00 PM–11:30 PM IST on T+0, and T+1 morning for international feeder funds). Our automated sync runs daily and displays the exact latest NAV date and sync timestamp.
Under SEBI regulations, AMCs disclose full scheme portfolios, stock weights, and Riskometer labels within 10 days of each month-end. Where a scheme’s latest statutory disclosure is not yet ingested, The Ark explicitly displays “Data unavailable” rather than estimating values.
Schemes are grouped strictly by official SEBI category definitions (e.g., Flexi Cap, Large Cap, Mid Cap, Short Duration) so risk metrics and category ranks compare like-for-like mandates rather than mixing equity with debt.
3. Survivorship Bias, IDCW Distributions, Scheme Mergers & Closed Funds
Why Survivorship Bias Distorts Screeners: Many consumer mutual fund portals silently delete merged, wound-up, or underperforming schemes from historical tables—making category averages appear artificially higher than what real investors experienced.
- •Growth vs. IDCW Separation: Growth options reinvest all portfolio income into NAV. IDCW (Income Distribution cum Capital Withdrawal) options experience downward NAV step-changes on every payout date; we never mix IDCW NAV series into Growth return rankings.
- •Scheme Mergers & Category Reclassifications: Following SEBI’s 2018 scheme categorization and subsequent AMC mergers, surviving schemes carry forward their official AMFI scheme code NAV series while discontinued scheme codes remain archived with explicit observation end dates rather than being erased.
- •Closed-Ended & Segregated (Side-Pocket) Folios: Close-ended FMPs/ELSS series and segregated credit portfolios are tagged separately so open-ended liquidity diagnostics are not skewed by locked or illiquid tranches.
Every scheme page and screener table distinguishes clearly between Direct Plans (zero distributor commission; suited for self-directed investors) and Regular Plans (which pay trail remuneration of ~0.50%–1.20% p.a. to The Ark Wealth Builders (ARN-187612) for portfolio construction, drawdown coaching, rebalancing reviews, and Tax Year capital-gains support with zero separate upfront fee).