Speaking to the Financial Express, managing director S&P Asia Pacific William J Reidy said that S&P, which is the world's leading provider of mutual funds information and analysis, is looking for an Indian partner to begin the mutual funds rating services.

``We are talking to three to four rating companies in India, including the existing partner Crisil, to kickstart the business,'' Mr Reidy said. The rating agency is also planning `internet solution' for the Indian mutual funds industry. ``We did not start the mutual funds rating earlier as we were waiting for some basic parameters to be fulfiled by the over 450 players in the mutual funds industry." Such parameters include size, history, and consistent performance of a fund to enable rating to for it.

``Both quality and quantity matter for mutual funds,'' Mr Reidy felt. The S&P rating will provide an assessment for the third party for any fund which can be used to market as well as procure more funds for the business. ``We will do a detailed analysis of every aspect of a mutual fund, including extensive interview of fund managers, to decide on the rating,'' he said.

``We will provide value-added information through e-mail to the Indian fund managers and an Indian mutual fund website will be launched to include the S&P research data and analysis to guide the common investor,'' he said.

The Mutual Fund of the Year 2000, Awards, are calculated by S&P using a methodology known as the Relative Risk Adjusted Ratio Method. This calculation evaluates the performance of a fund and the consistency of their performance relative to other funds in its peer group sector. The methodology is widely accepted in markets across the world. This method is calculated by using a fund's weekly or monthly performance, relative to its sector average over the time period analysed till that date. This means every week (a total of 52 weeks) for the year-long period and every month for three and five-year periods (36 months and 60 months respectively). The average monthly relative performance and the volatility of the monthly relative performance are used to calculate the fund's ratio.

This enables funds to be recognised for their true consistency of performance throughout the whole year.