Mutual funds – Peer Group Quartiles

As detailed in quartiles and percentiles posts different quartiles are calculated for funds of the same sector. Once a specific quartile is calculated say 1st quartile i.e. 25th percentile all the funds which are low performing than the 1st quartile funds are considered to be under 1st quartile similarly the other quartile funds are also calculated.

Effectively the funds of same sector are categorized into 4 parts. Peer group quartile information tells us in which part a fund falls in. Obviously the value is always either 1,2,3 or 4.

For investment decisions usually analysts think that a fund must perform consistently in such a way that it should be in the top quarter (high performing quarter, depends on the company how it treats different quartiles i.e. some companies treat 25th quartile as the 4th one and some as 1st one) continuously for 6-7 years etc.

Please read Peer group Ranking post as well.