PhonePe Wealth introduces data-driven mutual fund analysis tool CRISP
PhonePe Wealth's CRISP evaluates a fund’s exposure to investment factors such as value, quality, and momentum, categorising them across a three-tier scale of “High,” “Medium,” or “Low.”
PhonePe Wealth Broking, a subsidiary of fintech firm PhonePe, has launched a mutual fund evaluation tool, CRISP.
CRISP (Consistency, Risk, and Investment Style of the Portfolio) analyses funds using three metrics: consistency of returns over rolling five-year periods, risk levels relative to peers, and exposure to investment factors such as value, quality, and momentum.
CRISP evaluates a fund’s exposure to investment factors such as value, quality, and momentum, categorising them across a three-tier scale of “High,” “Medium,” or “Low”, with an aim to provide investors with standardised benchmarks beyond short-term performance data.
"The mutual fund industry is experiencing significant growth due to the industry’s investor awareness initiatives and democratisation of mutual fund investing by wealth tech platforms. At PhonePe Wealth, our focus is on supporting investors on our platform through innovative tools like CRISP," said Nilesh D Naik, Head of Investment Products at Share.Market, PhonePe Wealth’s trading platform.
The company noted in a release that CRISP’s risk assessment flags funds with volatility exceeding peer averages, while its style analysis aims to help users diversify portfolios by highlighting factor exposures. The tool is currently available on PhonePe Wealth’s platform.
PhonePe Wealth Broking, registered with Indian regulators including SEBI and AMFI, operates Share.Market, a trading app launched in 2023. The parent company, PhonePe, is majority-owned by Walmart Inc.
India’s mutual fund industry has expanded rapidly, fueled by rising retail participation and digital wealth platforms. However, regulatory disclosures warn that past performance does not guarantee future returns, a caution reiterated in PhonePe’s announcement.
The number of unique mutual fund investors in India surged to 53 million by December 2024, up from 20 million in 2019, according to data from the Association of Mutual Funds in India (AMFI). Despite this growth, selecting funds based on historical returns remains a common practice, often leading to suboptimal investment decisions, the company said.
A surge in SIP cancellations and investor panic, triggered by recent market downturns and the IndusInd Bank stock collapse, has highlighted critical flaws in how retail investors select mutual funds.
Data from AMFI reveals that many investors, particularly those entering the market post-2020, rely excessively on trailing returns or top-performing fund lists from fintech platforms, neglecting essential risk metrics like standard deviation and Sharpe ratio (comparing the return of an investment with risk), The CapTable reported.
This behaviour has led to overexposure to volatile categories such as small- and mid-cap funds, which have faced significant corrections.
Experts emphasise the risks of DIY investing through apps that prioritise convenience over education, often steering users toward recent high performers without addressing diversification or asset allocation. The result is a cycle of disillusionment, with investors abandoning underperforming funds during downturns—often at the worst possible time.
Edited by Kanishk Singh