To a retail investor investing Rs.10000 the difference in returns in absolute terms works out to just Rs.100. What he is really interested in is efficient service and timely disclosures in terms of factsheets etc. Thus you need to look at all the three factors rather than focus on a single factor. Having said that performance is one of the most important factors in determining the choice of a fund. Our aim is to beat the market median by 25 basis points with market risk lower than median i.e. standard deviation of 3 month rolling returns lower than the market average.
Any income fund carries both interest rate and credit risks.
D stands for dimensions. The dimensions analysed are economic fundamentals, market psychology and market valuations. These dimensions have weightages. In the Indian context economic fundamentals have lower weightage than short-term factors. This is contrast to the trend abroad where the economic numbers put out by the government have a large impact on bond prices.