Indications which is use to measure various aspects of a mutual fund.

POSTED BY Arup Kr. Dey ON June 13, 2013 6:33 am COMMENTS (5)

I want to know in details about the Indications which is use to measure various aspects of a mutual fund.
1. P/E Ratio
2. P/B Ratio
3.Standard Deviation
4.Sharpe ratio
5.Beta
6.Alpha
7.R-Squared
How these terms are calculated ? How these measurement can help me while I choose a mutual fund wheather It would be a Equity fund or Debt Fund or a Balanced fund ?

What is the deference in expense ratio in a direct fund and in a regular fund?
I have seen that the NAV of  a direct fund is always higher than a regular fund. Why??

5 replies on this article “Indications which is use to measure various aspects of a mutual fund.”

  1. Arup Dey says:

    Thank you All.

  2. Lakshmipathy G says:

    Arup Dev,

    I liked this explanation of Standard Deviation from this artice

    https://www.subramoney.com/2013/05/equity-markets-give-good-average-returns/

    “In cricketing language if you see Shahid Afridi and Rahul Dravid, – the 2 of them have an average of 22 and 58 respectively. However, Shahid Afridi has a high standard deviation and Rahul has a low standard deviation.

    Which means whenever Shahid Afridi goes out to bat, the probability of his getting 22 is NOT AS HIGH as Rahul Dravid getting 58.

    However, you need to remember that over the past 20 years, Rahul has an average of 58 and Shahid has an average of 22. “

    1. Lakshmipathy, that is indeed a very good read. Very very very few people actually have the discipline to remember it when the market dips everyday.

  3. Dear Arup, in addition to dear Pattu’s reply, point no. 1 & 2 are more important in direct Eq. investing & not so in MFs.

    Thanks

    Ashal

  4. NAV of a direct fund is and will always be higher because trail commission paid in case of regular plans are not applicable for direct funds. When this commission is paid the NAV decreases by a proportional amt.
    You can estimate how this difference will influence returns using a calculator I have in my site.

    Explaining how there terms are calculated is beyond the scope of this forum. Can easily be found from a internet search (in fact that is true for almost every question asked in this forum.

    Simple working definitions and how to use them (factors 3-7) for choosing a MF can be obtained from this step by step guide to choosing a mutual fund

    https://freefincal.wordpress.com/step-by-step-guide-to-choosing-a-mutual-fund/

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