Why the headline return misleads
Sort any list of funds or strategies by return and the top of the list is mostly the riskiest things that had a good run. The note you sorted by return, here is what you missed shows it on our own lineup. A fair comparison needs more columns, and it needs them measured the same way for both sides.
The seven checks below are the ones I run before putting two strategies, two funds, or a fund and a strategy side by side. They apply equally to a mutual fund factsheet, a PMS presentation and a RupeeCase strategy page. The risk metrics module defines each measure in more depth.
Check 1: the same dates
A three year return ending at a market peak and one ending after a 15% fall are not comparable. On 31 Dec 2025 the Nifty 50 price index had returned 12.12% a year over thirteen years; to 12 Oct 2026, the five year figure was 4.45% a year. Same index, different end date.
So line both up over exactly the same window, and if one has a shorter history, cut the other to match. If one strategy's back test starts in a crash and the other's at a peak, the comparison is about timing, not about the rules.
Check 2: the same benchmark, with dividends
Compare each with the total return index (TRI) of the same universe: dividends included. A fund compared with the Nifty 50 price index gets a free point or so a year, because the price index leaves out dividends. A mid cap rule should be compared with a mid cap TRI, not the Nifty 50, or its size tilt will look like skill.
Check 3: after every cost
A mutual fund's NAV is already after the expense ratio. A PMS return may be before the fee. A back test may be before trading costs. Ask which, and put both on the same footing. The factsheet guide shows where each document puts its costs.
Check 4: the deepest fall, and how long it lasted
The maximum drawdown is the deepest fall from a peak to a later low. It is the number that decides whether you stay invested. Pair it with the recovery time: a fall that recovers in four months and one that takes a year and a half feel very different while you are inside them.
Check 5: return per unit of risk
Two ratios do most of the work:
- Sharpe ratio: the return above a risk free rate, divided by volatility. It rewards a smooth ride.
- Calmar ratio: the return divided by the deepest fall (as a positive number). It answers "how much did I earn for the worst hole I had to sit in?"
The Sortino ratio is a Sharpe that counts only downside swings. The note Sharpe, Sortino, Calmar: three leaderboards shows how the rankings change with the ratio, and the Sharpe and volatility calculator works the first one out from your own numbers.
Check 6: how steady the record was
A CAGR is one number from two dates. Rolling returns, the share of positive months and the worst single month show whether the return came steadily or in one burst. A record built on one great year is more fragile than one built on many good ones.
Check 7: tax, turnover and the minimum
A fund's internal trading is not taxed in your hands; a strategy in your own demat is, at every sale. Higher turnover means more short term gains. Then check the practical side: the minimum amount, the number of stocks and how often it trades.
The worked example: Midcap against Large Midcap
Here are two RupeeCase rules over the same model back test, after costs, from the lineup data as of 27 Apr 2026. The CAGR, deepest fall and Sharpe come from the published lineup; the other figures are computed from the same monthly model values.
| Model, as of 27 Apr 2026 | Midcap | Large Midcap |
|---|---|---|
| Universe | Nifty Midcap 150 | Nifty LargeMidcap 250 |
| Stocks, rebalance | 20, every 2 weeks | 40, every 2 weeks |
| CAGR | 38.75% | 37.83% |
| Deepest fall | −24.87% | −19.31% |
| Days to recover the deepest fall | 322 | 378 |
| Sharpe | 1.49 | 1.69 |
| Calmar (CAGR ÷ deepest fall) | 1.56 | 1.96 |
| Volatility of monthly returns, a year | 25.59% | 21.10% |
| Worst month | −15.49% | −11.10% |
| Months with a gain | 63.8% | 69.0% |
| Minimum | ₹90,000 | ₹1,99,000 |
Midcap and Large Midcap rebased to 100 finished close to each other, with Midcap swinging wider in both directions; the Nifty 50 TRI line rose far less.
Model, back tested, costs deducted. The Nifty 50 TRI line is a smoothed CAGR line, not the daily index. Source: RupeeCase lineup data. Not a promise of future returns.
Read the table from the top. The returns are within a point of each other, so check 1 to 3 do not separate them. Check 4 does: Midcap's deepest fall was about five points deeper, though it recovered faster, in 322 days against 378. Check 5 favours Large Midcap on both ratios. Check 6 too: lower monthly volatility, a milder worst month, more months with a gain. Check 7 depends on your amount.
None of this makes Large Midcap "better". It makes it a different ride for about the same destination in this back test. An investor who can sit through a 25% fall and wants the mid cap tilt may still choose Midcap. The point is to choose with the whole table, not the first column.
Back test against live record
One more line belongs at the top of any comparison: is each number a live record of real money, or a back test? A back test applies today's rules to past prices. It can be honest, with costs and without hindsight, but it has never had to survive a real investor's nerves or a rule change. A live fund record has, but includes its manager's changes of mind. When one side is a back test and the other is live, say so in the comparison, and give the back test less weight. The factsheet guide and the CAGR vs XIRR guide cover how each kind of record is measured.
Comparing two strategies, step by step
- Fix the windowthe same start and end dates for both, cut to the shorter history.
- Fix the benchmarkthe total return index of the matching universe, and returns after all costs for both.
- Read the deepest fallits size, its dates and the days to recover, then the fall in rupees on your amount.
- Put both on one scaleSharpe and Calmar side by side, and the volatility behind them.
- Check the consistencyrolling returns, the worst month and the share of good months.
- Add the practical sidetax from turnover, the minimum, the number of stocks and how often it trades.
- Write down why you choseso the choice is judged on the same table a year later, not on the latest month.
What would you do?
Two strategies show almost the same CAGR. One fell 25% at its worst, the other 19%. You have ₹10 lakh and know you sold in March 2020.
- Pick the one with the higher CAGR anyway
The extra point of model return came with a worst case about ₹56,000 deeper on ₹10 lakh. If that fall makes you sell, the point is gone.
- Pick the one whose worst fall you can hold through
On these numbers that is the 19% one. Choosing by the fall you will survive keeps you invested for the return.
Midcap and Large Midcap deepest falls, model, back tested, RupeeCase lineup data as of 27 Apr 2026. An illustration of the method, not advice.
How this shows up in RupeeCase
Every pair of RupeeCase strategies can be put side by side on the compare pages, with the same dates, the same Nifty 50 TRI line and every figure in this guide. Large Midcap holds 40 stocks from the large and mid cap universe, rebalanced every 2 weeks: model CAGR 37.83%, deepest fall −19.31%, Sharpe 1.69, as of 27 Apr 2026. All figures are model, back tested, after costs; the pages say so next to every number.
Questions investors ask
How do I compare two mutual funds?
Use the same period, compare both with the same total return index, then look at the deepest fall, volatility, Sharpe ratio, expense ratio and how steady the rolling returns were. The highest return alone is the weakest test.
What is a good Sharpe ratio?
Above 1 is generally considered good for an equity strategy, but it depends on the period. Compare Sharpe ratios only over the same dates. In the RupeeCase data as of 27 Apr 2026, the Nifty 50 TRI line on the Large Midcap page had a Sharpe of 0.73 over the same window.
What is the Calmar ratio?
The yearly return divided by the deepest fall. A strategy that earned 20% a year with a 20% worst fall has a Calmar of 1. It tells you how much you were paid for the worst hole you had to sit in.
Is a higher CAGR always better?
No. A higher CAGR that came with a much deeper fall can leave an investor worse off if the fall makes them sell. Compare the return with the risk taken to get it.
Should I compare a back test with a live fund record?
You can, but label each. A back test applies today's rules to past data and has not been tested by real money; a live record has. Give the back test less weight.
How long a period should I use to compare strategies?
As long as both have data for, and at least one full cycle with a fall in it. A three year window inside a bull market says little about risk.