How to read a mutual fund spec sheet?
How do you read a fund sheet?
Quote:
Quote: It usually says a lot then at the top of the fund fact sheet you want to read the funds investment objective and style what financial goal is the fund trying to achieve.
How do you read a mutual fund statement?
The NAV is the price per unit of the securities in the mutual fund scheme. It denotes your fund’s performance. The current cost is the total investment value in your scheme. The current value is the latest market value of all your investments undertaken.
How do you Analyse a fact sheet?
5 key points you must know about reading a Factsheet
- Performance. Although the past performance is not the parameter to gauge the future performance, it gives you an idea about how that particular scheme may perform in the future. …
- Industry allocations and portfolio holdings. …
- Expense ratio. …
- Scheme Details. …
- Fund Managers.
How do you Analyse mutual fund performance?
Attribution Analysis
- Step 1: Determine the sector weights for both the fund and the index.
- Step 2: Calculate the contribution of each sector for the fund by multiplying the sector weight by the sector return. …
- Step 3: Calculate the rate of return for the fund by adding the contribution of each sector together.
What should I look for in a fund?
How do I decide which fund to invest in?
- Think about risk. Different funds have different levels of risk. …
- Check independent fund ratings. Thousands of funds are given a rating by independent firms. …
- Pay attention to charges. Investing isn’t free. …
- Don’t only pay attention to fees. …
- Look at the performance figures. …
- Dig deeper.
What kind of information can you expect to find on a fund fact sheet?
The fact sheet will give you the following information: Fees: Before you buy a fund, you need to analyze what fees it comes with, including the fee paid to the fund’s manager. Good returns can be easily obliterated by high fees. Risk assessment: The fact sheet will show how risky a fund is.
Is a higher or lower NAV better?
A comparative analysis based on NAV between two Mutual Funds to understand which one will be better for your money is baseless. It is actually just a common myth that most investors believe to be true. A High or Low NAV says nothing about the future of your investment.
How do you read a portfolio statement?
Quote:
Quote: You should check that the exposure to any particular scheme. Should not be alarmingly. High next look for the column on returns investor. Should check absolute.
What is valuation in mutual fund?
How are Mutual Funds Valued? The value of a mutual fund represents its price per share. The Net Asset Value (NAV) is calculated in dollars and the value per share is derived by dividing the total value of all assets in the portfolio minus liabilities by the outstanding number of fund shares.
What is a good Sharpe ratio for a mutual fund?
Investments having less than 1.00 do not generate higher investor returns. However, investments with Sharpe Ratio between 1.00 to 3.00 are considered great Sharpe Ratio and investments above 3.000 are considered excellent Sharpe Ratio.
What is a good rate of return for a mutual fund?
For stock mutual funds, a “good” long-term return (annualized, for 10 years or more) is 8% to 10%. For bond mutual funds, a good long-term return would be 4% to 5%.
What are performance indicators in mutual funds?
There are five main indicators of investment risk that apply to the analysis of stocks, bonds, and mutual fund portfolios. They are alpha, beta, r-squared, standard deviation, and the Sharpe ratio.
How do you know if a mutual fund is doing well?
Compare Performances
Morningstar ranks each fund’s risk and historical returns against other funds within its universe so you can easily determine if a fund assumes a greater risk than average. The ideal balance between the two, the risk and the returns depends, again, on your risk tolerance and investment objectives.
What does R-squared mean in mutual funds?
Benchmark Correlation
R-Squared Measures Benchmark Correlation
R-squared is a measure of the percentage of an asset or mutual fund’s performance as a result of a benchmark. Fund managers use a benchmark to evaluate the performance of a mutual fund. For example, a mutual fund might use the S&P 500 as its benchmark index.
What is a good alpha?
A positive alpha of 1.0 means the fund or stock has outperformed its benchmark index by 1 percent. A similar negative alpha of 1.0 would indicate an underperformance of 1 percent. A beta of less than 1 means that the security will be less volatile than the market.
Is alpha better than beta?
Key Takeaways. Both alpha and beta are historical measures of past performances. A high alpha is always good. A high beta may be preferred by an investor in growth stocks but shunned by investors who seek steady returns and lower risk.
Is a negative alpha bad?
A positive alpha indicates the security is outperforming the market. Conversely, a negative alpha indicates the security fails to generate returns at the same rate as the broader sector. So, according to this definition, a stock with a negative alpha is underperforming.
What is a good portfolio alpha?
Defining Alpha
Alpha is also a measure of risk. An alpha of -15 means the investment was far too risky given the return. An alpha of zero suggests that an asset has earned a return commensurate with the risk. Alpha of greater than zero means an investment outperformed, after adjusting for volatility.
Should my beta be high or low?
A stock that swings more than the market over time has a beta above 1.0. If a stock moves less than the market, the stock’s beta is less than 1.0. High-beta stocks are supposed to be riskier but provide higher return potential; low-beta stocks pose less risk but also lower returns.
What is a good beta for a portfolio?
A beta value that is less than 1.0 means that the security is theoretically less volatile than the market. Including this stock in a portfolio makes it less risky than the same portfolio without the stock.
What does a beta above 1 mean?
A beta of 1 indicates that the security’s price tends to move with the market. A beta greater than 1 indicates that the security’s price tends to be more volatile than the market. A beta of less than 1 means it tends to be less volatile than the market.
What does a β of 1.3 mean?
The beta for a stock describes how much the stock’s price moves compared to the market. If a stock has a beta above 1, it’s more volatile than the overall market. For example, if an asset has a beta of 1.3, it’s theoretically 30% more volatile than the market.
Is beta a good measure of risk?
The underlying reason that beta is ineffective as an indicator of risk, or the potential for long-term loss of capital, is that beta is simply a measure of share price volatility. The true risk associated with a company is a result of its business fundamentals.
What does a beta of 1.5 mean?
Roughly speaking, a security with a beta of 1.5, will have move, on average, 1.5 times the market return. [More precisely, that stock’s excess return (over and above a short-term money market rate) is expected to move 1.5 times the market excess return).]
What is a good dividend yield?
What is a good dividend yield? In general, dividend yields of 2% to 4% are considered strong, and anything above 4% can be a great buy—but also a risky one. When comparing stocks, it’s important to look at more than just the dividend yield.
What does beta coefficient of 0.80 and 1.20 indicate?
“A measure of a fund’s risk, or volatility, compared to the market which is represented as 1.0. A fund with a beta of 1.20 is 20% more volatile than the market, while a fund with a beta of 0.80 would be 20% less volatile than the market.”