Merely looking at YoY returns for choosing a fund is not always good. There are other factors you need to look upon for better/smart investment. So checkout the below numbers before investing. These numbers are available at ValueResearchOnline dot com.
Alpha: A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%. For investors, the more positive an alpha is, the better it is.
Beta: A beta of 1.0 indicates that the investment's price will move in lock-step with the market. A beta of less than 1.0 indicates that the investment will be less volatile than the market, and, correspondingly, a beta of more than 1.0 indicates that the investment's price will be more volatile than the market. For example, if a fund portfolio's beta is 1.2, it's theoretically 20% more volatile than the market.
So, investors looking to preserve capital should focus on securities and fund portfolios with low betas, whereas those investors willing to take on more risk in search of higher returns should look for high beta investments.
R-Squared: R-squared values range from 0 to 100. A mutual fund with an R-squared value between 85 and 100 has a performance record that is closely correlated to the index. A fund rated 70 or less would not perform like the index.
Standard Deviation: The standard deviation tells us how much the return on a fund is deviating from the expected returns based on its historical performance.
Sharpe Ratio: The Sharpe ratio tells investors whether an investment's returns are due to smart investment decisions or the result of excess risk. The greater an investment's Sharpe ratio, the better its risk-adjusted performance. Higher the Sharpe ratio number the better is the fund.
Sortino Ratio: A large Sortino Ratio indicates a low risk of large losses occurring.
Expense Ratio: The percentage of fees paid to the mutual fund company to manage and operate the fund, including all administrative expenses. The expense ratio excludes sales charges. Lower expense ratio is good.
Alpha: A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%. For investors, the more positive an alpha is, the better it is.
Beta: A beta of 1.0 indicates that the investment's price will move in lock-step with the market. A beta of less than 1.0 indicates that the investment will be less volatile than the market, and, correspondingly, a beta of more than 1.0 indicates that the investment's price will be more volatile than the market. For example, if a fund portfolio's beta is 1.2, it's theoretically 20% more volatile than the market.
So, investors looking to preserve capital should focus on securities and fund portfolios with low betas, whereas those investors willing to take on more risk in search of higher returns should look for high beta investments.
R-Squared: R-squared values range from 0 to 100. A mutual fund with an R-squared value between 85 and 100 has a performance record that is closely correlated to the index. A fund rated 70 or less would not perform like the index.
Standard Deviation: The standard deviation tells us how much the return on a fund is deviating from the expected returns based on its historical performance.
Sharpe Ratio: The Sharpe ratio tells investors whether an investment's returns are due to smart investment decisions or the result of excess risk. The greater an investment's Sharpe ratio, the better its risk-adjusted performance. Higher the Sharpe ratio number the better is the fund.
Sortino Ratio: A large Sortino Ratio indicates a low risk of large losses occurring.
Expense Ratio: The percentage of fees paid to the mutual fund company to manage and operate the fund, including all administrative expenses. The expense ratio excludes sales charges. Lower expense ratio is good.
