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Trending: Top 3 California Municipal Bond Funds
Justin Kuepper
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Municipal bonds have been a safe haven within fixed income markets that have...
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Mutual funds use the same ratio, but it’s expressed as the average of all the individual P/Es of the stocks held within the fund. This figure can help you identify whether the fund is geared towards growth or value and how expensive it is compared to its peers. But aside from the P/E ratio, mutual funds have some specific fundamental qualifiers with which investors should be familiar.
This ratio can be used to determine whether a fund has “beaten” the market or not based on its risk parameters. It examines performance relative to the risk associated with the assets held in a portfolio. In other words, it will tell an investor whether a fund’s excess returns are a result of smart mangement decisions or simply a result of holding too much risk.
This ratio is a great comparative tool to see if a mutual fund truly outperformed the market based on the risk it took on or not. Imagine the S&P 500 gained 12% last year and the risk-free rate was 2% – the beta of the market is assumed to be 1. That gives it a Treynor ratio of 10%. Now take a mutual fund that returned 8% but its beta was only 0.5. That means the fund’s Treynor ratio is 12% thus beating the market from a risk-reward standpoint.
Putting it all together, comparing these ratios against other mutual funds will help you select the ideal one for your portfolio.
Receive email updates about best performers, news, CE accredited webcasts and more.
News
Justin Kuepper
|
Municipal bonds have been a safe haven within fixed income markets that have...
Kristan Wojnar, RCC™
|
We are exploring the topics of virtual nonverbal communication, getting your blogs to...
Justin Kuepper
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Let’s take a look at a few key pieces of advice to stop...
Find out why $30 trillon is invested in mutual funds.
Download our free report
Find out why $30 trillon is invested in mutual funds.
Download our free report
Find out why $30 trillon is invested in mutual funds.
Mutual Fund Education
Justin Kuepper
|
Let's take a closer look at how ESG investments have outperformed during the...
Mutual Fund Education
Daniel Cross
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While CITs and mutual funds share many similarities, there are some key differences...
Mutual Fund Education
Sam Bourgi
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The phrase ‘bear market’ has been thrown around a lot lately, but it...
Mutual funds use the same ratio, but it’s expressed as the average of all the individual P/Es of the stocks held within the fund. This figure can help you identify whether the fund is geared towards growth or value and how expensive it is compared to its peers. But aside from the P/E ratio, mutual funds have some specific fundamental qualifiers with which investors should be familiar.
This ratio can be used to determine whether a fund has “beaten” the market or not based on its risk parameters. It examines performance relative to the risk associated with the assets held in a portfolio. In other words, it will tell an investor whether a fund’s excess returns are a result of smart mangement decisions or simply a result of holding too much risk.
This ratio is a great comparative tool to see if a mutual fund truly outperformed the market based on the risk it took on or not. Imagine the S&P 500 gained 12% last year and the risk-free rate was 2% – the beta of the market is assumed to be 1. That gives it a Treynor ratio of 10%. Now take a mutual fund that returned 8% but its beta was only 0.5. That means the fund’s Treynor ratio is 12% thus beating the market from a risk-reward standpoint.
Putting it all together, comparing these ratios against other mutual funds will help you select the ideal one for your portfolio.
Receive email updates about best performers, news, CE accredited webcasts and more.
News
Justin Kuepper
|
Municipal bonds have been a safe haven within fixed income markets that have...
Kristan Wojnar, RCC™
|
We are exploring the topics of virtual nonverbal communication, getting your blogs to...
Justin Kuepper
|
Let’s take a look at a few key pieces of advice to stop...
Find out why $30 trillon is invested in mutual funds.
Download our free report
Find out why $30 trillon is invested in mutual funds.
Download our free report
Find out why $30 trillon is invested in mutual funds.
Mutual Fund Education
Justin Kuepper
|
Let's take a closer look at how ESG investments have outperformed during the...
Mutual Fund Education
Daniel Cross
|
While CITs and mutual funds share many similarities, there are some key differences...
Mutual Fund Education
Sam Bourgi
|
The phrase ‘bear market’ has been thrown around a lot lately, but it...