Credo FP Maps

Credo’s FP Mapping Model reveals strengths and weaknesses in a companys product line. It also reveals strengths and weaknesses in the companys sales and marketing efforts. It is used to develop strategies and it is used to assess the results of tactical initiatives. It is also used as competitive intelligence, to help you identify holes in competitors offerings.

Credos FairShare for Performance (FP) Mapping Analyses compare:

  • The financial performance of a set of mutual funds with;
  • Whether or not the mapped funds are gaining or losing market share within their respective asset categories.

Credos FP Maps generally present either a single companys portfolio of funds or the funds within a single asset category. Each Credo brief therefore revolves around a single map.

The horizontal axis of a Credo FP Map (i.e., left to right in the map) represents gains or losses in market share within the funds specific asset category. Funds that reside to the left of the origin lost market share within the asset category over the period being considered; funds to the right of the origin gained market share within their asset category over the period being considered.

The vertical axis represents financial returns. Funds above the origin delivered better than average returns within their asset category over the period being considered. Funds that fall below the origin delivered lower than average returns within their asset category, again, over the period being considered.

All else being equal, if a fund has above average returns over time, it should gain market share. Conversely, if it has below average returns, it should lose market share. If this postulate is true, then mutual funds mapped in Credos FP Maps should align along the diagonal that runs from the bottom left of this map – where poor performance is met with losses in market share – to the top right of the map – where above average performance is met with gains in market share. Credo has found that this is seldom the case. There is a weaker relationship between performance and market share changes than one might expect.
It is important to note, therefore, that funds that fall above the diagonal are being undersold for the performance that they are delivering while funds below the diagonal are being oversold for the performance that they are delivering. The Credo FP Map reveals that few mutual funds sit where one might expect them to be, i.e., along the diagonal.

Credo briefs discuss funds that fall:
Far enough from the mean performance within their asset class (either above or below this mean); or,

Far enough away from the mean with respect to market share gains or losses to warrant their classification as exceptional funds.

These exceptional funds are categorized as:

FUNDS THAT MET EXPECTATIONS: These are funds that “fall on the map’s diagonal”.

UNDERSOLD FUNDS: These are funds that have been undersold for the level of performance that they deliver.

OVERSOLD FUNDS: These are funds that have garnered more in sales than our performance correction model indicates the fund should have had.

For information about Credos more comprehensive FairShare for Performance analysis, contact Credo Consulting Inc., tel. 905.919.1926