POSTED BY March 7, 2014 7:36 pm COMMENTS (4)ON
I am planning to start investing in mutual funds. Before starting i am trying to gain knowledge about how we can select mutual funds. From manish’s article i come to know that we should look for higher sharpe ratio, Alpha, R-squared should be in between 80 to 90, lower expense ratio. Also read somewhere i think in ashal’s comment that we should compare Calender year return with benchmark and category.
But apart from above I saw some other terms in valueresearchonline.com like Mean, Std dev, sortino, beta. What is the importance of these terms? What value of these terms i should look for?
Also what should we look for regarding duration Mutual fund duration or its fund manager’s duration?
How much net assets are important?
Also if my understanding is correct the ranking on valueresearch is depending on recent returns. may be in last 1 year. Is this correct? If yes should we give importance to the ranking if one planning to invest for long term.?
and my last question is about expense ratio:
Lets say mutual fund x has expense ratio of 2%. If that mutual fund returns are showing 20% in last 1 year. So what will be the value of my investment if my investment amount is 100. Is it 100 + ((100*20)/100) = 120 OR (100-2%) + ((98*20)/100) = 117.6 OR this expense ratio of will get deducted from value of 120 OR the returns 20% which are shown are after expense ratio deduction?
Sorry for so many questions in one go. Let me know if any question is confusing. Eagerly waiting for your answers