5 Simple and Easy steps in selecting a good Mutual Fund Scheme

Hi,

We all spend lot of time figuring out to find good Mutual Funds which can give us good profits . In market we have Thousands of schemes floating and every Mutual Fund company says their scheme is best. How do you decide which one is Good. Read on.......

To make it simple , I will not explain the concepts used below :



1) Sharpe Ratio -  Should be as higher as possible. Higher the better.Generally expressed in numbers like 1, 1.3 etc . Should be more than one .

2) Standard Deviation - Medium to low is better. Generally expressed in percentage.

3) R -Squared - Should be more than 0.75 . Generally expressed as a range from 0 to 1

4)  Beta : Depends on what kind of investor you are: It is expressed in numbers like 1, 1.5 , 2 etc

 a) High risk taking investor  : High beta may suit you
 b) Low risk taker : Low beta may suit you.

5)  Alpha :  Higher is better. Should be more than Beta. Expressed in numbers.




With the above data, also check how the scheme has performed in terms of returns in the past.

Data relating to above concepts is available readily for all the schemes on various websites like valueresearchonline.com , mutualfundsindia.com etc etc

Before investing just check if the scheme which you wanted to invest matches the above parameters.

Thank you