A Detailed Look at the Mutual Fund Ratios
Hello friends lets understand Most important ratios in mutual fund investment A Detailed Look at the Mutual Fund Ratios Given below are the details of various mutual fund ratios: Alpha This ratio denotes how a fund has performed compared to its benchmark index. In other words, alpha denotes how well a fund manager has been able to manage a fund. Based on the fund manager’s performance, an actively managed fund will have a positive or negative alpha. The baseline for alpha is 0. If a fund’s alpha is greater than 0, it indicates that the fund is performing better than its underlying benchmark. If it is 0, the mutual fund performs the same as its benchmark index. Conversely, a negative alpha reflects a fund’s underperformance compared to its benchmark. Let us use an example to understand this. For example, suppose the NIFTY 50 index generated 13% in the previous year. If a mutual fund with NIFTY 50 as its underlying benchmark delivered 10%, its alpha will be -3%. It means...