mutual funds old

8/4/2019 Mutual Funds Old

1/12

HOW TO INVEST IN

MUTUAL FUNDS?

By Neha Varma07MBI062


2/12

OPTIMAL PORTFOLIO THEORY


3/12

OPTIMAL PORTFOLIO

THEORY

Relationship between

portfolio returns and risk is

the EFFICIENT FRONTIER.

Plotting return and risk

indicated by volatility, which

is represented by standard

deviation.

According to the modern

portfolio theory, funds lying

on the curve yield

maximum return possible

given the amount of

volatility.


4/12

HOW TO INVEST IN MUTUAL

FUNDS??

Step One : Identify your investment needs What are my investment objectives?

Regular income, Buy home, wedding

How much risk am I willing to take? Min Risk, Max Risk

What are my cash flow requirements?

Regular Cash flow, Lump Sum Amount


5/12

Step Two : Select ideal mix of schemes

Investor may invest in one mutual fund or a combination of them


6/12

Step Three: Choose the Right Mutual Fund

Track record of performance in comparison with

other funds

Conduct Performance Analysis

Step four : Invest regularly

Step five : Keep taxes in mind

Step Six : Start early


7/12

PERFORMANCE ANALYSIS OF

MUTUAL FUND

There are various indicators of the investment

risk and return that can apply to stocks, bonds

and mutual fund portfolios.

Standard Deviation

Jensen Alpha

Sharpe Ratio

Treynor Ratio


8/12

Standard Deviation

Measures the volatility of the returns of a mutual fund scheme over a

particular period.

How much the fund's return can deviate from the historical mean return

of the scheme.


9/12

SHARPE RATIO

This measures how well the fund has performed when compared to the

risk taken by it

It is the excess return over risk-free return (usually return from treasury

bills or government securities) divided by the standard deviation.

The higher the Sharpe Ratio, the better the fund has performed in

proportion to the risk taken by it. A negative Sharpe ratio indicatesthat a risk-less asset would perform better than the security being

analyzed.


10/12

TREYNOR RATIO

measurement of a portfolios return earned in excess of what would be

earned on a risk-free investment

used to calculate returns over and above what would be generated by a

risk-free investment

The higher the Treynor , the better is the performance of the portfolio or

stock being analyzed also known as the "reward-to-volatility ratio"


11/12

JENSENS ALPHA

The simplest definition of an alpha would be the excess return of a fund

compared to its benchmark index.

HDFC Infra having the highest Alpha - has outperformed the benchmark by

4.04% which is better than all other funds, most of them being negative

return.


12/12

By Neha Varma07MBI062

mutual funds old

Documents