Research Star Ratings

Our MAPS methodology is built on the foundations of fundamental research. A key component of this is our Star Ratings system that we have used at Fundsupermart (FSM Global) since 2001.

Stock prices track the growth of corporate earnings, which is driven by economic growth. Thus, over the long term, both economic and earnings growth are important considerations in the forecasting of stock market return.

Using a time-tested valuation-driven approach based on these fundamentals helps us uncover where value exists and opportunities await. Our Star Ratings system is a guide to what we believe are the most attractive investments amongst the various regional and single-country/region equity markets on a standalone basis, as well as with respect to other markets.

In our Star Ratings exercise, we look at key valuation metrics like price-to-earnings and price-to-book ratios, expected earnings growth, as well as excess earnings yield, to determine how attractive a particular market is.

In addition, we consider the economic outlook using both consensus forecasts and our own assessment. Our methodology incorporates both top-down and bottom-up forecasts. We also use qualitative adjustments where necessary to arrive at reasonable estimates of target upside for each market over a 3-year horizon.

How Has This Method Fared Thus Far?

Our Star Ratings system has thus far served us well. Taking the US equity market as a case study, we can see how our Star Ratings has fared when it comes to delivering total returns (capital appreciation + dividends reinvested) over the medium term of 3 to 5 years.

If you had bought US equities when our Star Ratings were rated 3.0 Stars "Attractive" or higher, the returns you would have reaped on a 3 year or 5 year basis would have been substantial.