Friday, November 16, 2007

Mutual fund fundas

Beta- Measure of volatility

Beta is the measure of the sensitivity of a fund to its index. A Beta of 1.5 means that the fund tends to rise and drop 50% more than the index does.

Alfa- Performance of fund

Alfa is an indicator of a funds excess return over that predicted by Beta of the portfolio/ Alfa of the fund gives the level of variability of return of the fund. If one goes by the Beta of the fund and it predicts a return of say 10% and the funds return is say 15% then alfa would be 5% . A positive alfa indicates a good fund manager performance

Standard deviation of Portfolio.

Provides level of correlation between fund return and market return.

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