DISCLAIMER - I have no intentions to become a finfluencer. These posts are just to trigger personal finance conversations as I see many noobs chasing small/mid caps without a fundamental understanding.
3 interesting parameters to select MFs!
Standard Deviation - It reflects the range of returns from the investment amount. 10% SD on 1000 rs investment can return from 900 to 1100. Higher the SD, riskier the investment.
Beta - This reflects the downside of MF against the benchmark. Beta < 1, fund has better downside protection. If Beta > 1, fund might fall more if markets see a correction.
Alpha - It reflects upside on fund when risk-adjusted against benchmark. Risk adjustment in easier terms can be absorbed as if benchmark index would have taken similar volatile stocks what would have been returns associated with it. To connect the dots, a fund can have higher positive returns with higher negative returns. Alpha will absorb downside and reflect upside after that.
Exercise - Check the SD, Alpha, Beta of any two funds in the same category and share your learnings.
For any category of funds (flexicap, small, large) these 3 parameters can be used for comparisons. Few more parameters are there but those can be explained later.
Which factors you use while buying a Mutual Fund?
Happy Weekend!
I just check last 1y, 3y and 5y performance.
Expenses and fund manager bio alongwith portfolio analysis
That can be dangerous, till few years ago Axis AMC funds were top performing. I entered looking at the past performances. Since covid, Axis is worst performing AMC. Team disintegrated, no consistency in investment philosophy, poor returns🥲
I need to follow ur strategy then
What are your thoughts on etfs
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