Analysis Of Mutual Fund
                     ANALYSIS OF MUTUAL 
FUND
INTRODUCTION
• When it comes to investing in mutual funds, you need to know how to analyze and pick funds that 
are best suited for you. Most beginners look at returns, riskiness or ratings of a fund before 
investing. 
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WHAT IS A MUTUAL FUND?
• A mutual fund is a professionally managed investment fund that pools money from many 
investors to purchase securities. 
• It is a company that pools money from many investors and invests the money in securities such 
as stocks, bonds, and short-term debt. Each share represents an investor's part ownership in the 
fund and the income it generates.
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COMPARE MUTUAL 
FUND PERFORMANCE
COMPARE FUND HISTORY
• A mutual fund’s real worth can be understood only during unfavourable market phases, and a 
fund history can validate that. Look for a fund that has a relatively longer fund history say 5 to 10 
years. Compare fund performance across different time intervals and business cycles.
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COMPARE FUND EXPENSE RATIO
• Expense Ratio is the annual fee charged by the fund for managing your investment. As per SEBI 
guidelines, the fund houses cannot charge more than 2.5% of the fund’s average asset under 
management (AUM). You need to check the expense ratio of mutual funds before finalising on a 
given fund.
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COMPARE RISK-ADJUSTED 
RETURNS
• Instead of looking at just annualised returns, look for risk-adjusted returns of the fund. As per 
risk-return tradeoff, a higher degree of risk should be compensated by a higher level of returns. 
The risk is measured with the help of standard deviation.
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COMPARE AVERAGE MATURITY
• These are essentially used to evaluate debt funds. Average maturity relates to the period after 
which the securities held by a debt fund will mature. The longer the maturity, the higher is its 
sensitivity to interest rate movements and higher are chances of a fall in the fund NAV due to a 
rise in interest rates.
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COMPARE FUND’S ALPHA AND BETA
• Alpha measures the number of extra returns generated by the fund in excess of the benchmark 
returns. Beta measures the riskiness of a fund. 
• Moreover, it shows whether the fund loses/gains more/less than the benchmark. If the beta value 
is more than one, it shows that the fund gains/loses more than the benchmark.
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COMPARE PORTFOLIO TURNOVER 
RATIO (PTR)
• The portfolio turnover ratio tells you how often the fund manager buys/sells securities in the 
portfolio. In case of equity funds, it shows the level of trading taking place in the fund. 
• You need to know that whenever an equity share is bought/sold, it attracts transaction charges 
like the brokerage.
Source: cleartax.in
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