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All funds rated 5 star by Morningstar

  8/10/16 6:58 AM

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Morningstar has given a 5-star rating to all our funds. People who are acquainted with ULIPs will know that the litmus test for any life insurer is the ratings that the company’s funds receive from independent rating houses like Morningstar. For those not acquainted with ULIPs, let’s start from the beginning.

What is ULIP?

Unit Linked Insurance Plan (ULIP) is a life insurance plan that offers an option for both protection and investment. In other words, some part of the premium that you pay towards the ULIP is allocated for investment in money market instruments while the other part is allocated towards life risk coverage. In the event of death at any point of time during the policy period, the Sum Assured or the appreciated value of the investment, whichever is higher is paid. On maturity, the value of the investment is paid. Thus, it offers a combination of investment with protection.

What are ‘funds’?

The investment part of the premium that ULIP holders pay as mentioned above, is invested in money market instruments through various ‘funds’ which have, like Mutual Funds, NAV(Net Asset Value). These ‘funds’ are broad categories of investments. For example, if you are a high-risk taker and have opted for investing your money in equity-based money market instruments, your money will be parked in the Equity Fund. Within this equity fund, there will be different entities where the amount will be actually invested. As a ULIP holder, you will be allotted units based on the premium paid and the NAV of fund chosen by you. The fund managers regularly keep moving the corpus between different entities within the same fund.

What are fund ratings?

This brings us back to the opening statement that the litmus test for any life insurer is the ratings that the company’s funds receive from independent rating houses; what does it actually mean? The funds of life insurers and Mutual Fund houses are rated by independent rating agencies who judge their performance based on various parameters. One such renowned independent rating company is Morningstar. Morningstar evaluates and rates funds. When Morningstar provides a 5-star to funds it means that the funds will provide good investment solutions.

All individual funds of Edelweiss Life have been rated 5-star by Morningstar. Last year as well, all our individual funds were rated 5-star by Morningstar. This also portrays that the funds have consistently performed well.

When funds get a 5-star rating one can invest without any worries, as they can be rest assured that their investments are being handled well.

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