A quartile is a specific percentile. First, second, third quartiles are 25th, 50th and 75th percentiles respectively. As discussed in the percentile calculations post the position of the pth percentile item, i = (p/100) * n where n is the total numbers in the data sample.
Calculate these quartiles as described in the post. If a fund falls under top quartile (percentile greater than 75) is considered for investment.
March 19, 2010 | Filed Under
Mutual Funds |
Leave a Comment As detailed in
quartiles and
percentiles posts different quartiles are calculated for funds of the same sector. Once a specific quartile is calculated say 1st quartile i.e. 25th percentile all the funds which are low performing than the 1st quartile funds are considered to be under 1st quartile similarly the other quartile funds are also calculated.
Effectively the funds of same sector are categorized into 4 parts. Peer group quartile information tells us in which part a fund falls in. Obviously the value is always either 1,2,3 or 4.
For investment decisions usually analysts think that a fund must perform consistently in such a way that it should be in the top quarter (high performing quarter, depends on the company how it treats different quartiles i.e. some companies treat 25th quartile as the 4th one and some as 1st one) continuously for 6-7 years etc.
March 19, 2010 | Filed Under
Mutual Funds |
1 Comment Investment research companies like
Morningstar collect data from different fund houses. They categorize the funds into different sectors. A fund can be compared only with the funds of the same category because risk profile and investment objective match for the funds of the same sector.
Morningstar receives fund holdings and calculate performance of the funds, arranges funds of same sector in descending order of performance i.e. high performing fund at the top and assigns rank. Peer group ranking is the position of a fund compared to the peers of the same sector.
This is useful to the investors and investment analysts as they can make investment decisions based on the position of a particular fund relative to the other funds of the same sector.
March 19, 2010 | Filed Under
Mutual Funds |
Leave a Comment There are quite a number of risk measures which give key information on the risk taken by the portfolio manager. The following is the list of some risk measures used in the world of mutual funds.
Relative Volatility
Standard Deviation
Alpha
Beta
Information Ratio
Sharpe Ratio
Treynor’s Ratio
Tracking error
R Square
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February 20, 2010 | Filed Under
Mutual Funds |
Leave a Comment An exchange traded fund (ETF), as the name implies trades on an exchange just like any other stock but tracks an index, a commodity like an index fund. As far as trading is concerned, it’s like a stock from the perspective of an investor. An investor can short, use margins provided by depository participants/brokerages.
From functional point of view it combines the characteristics of both open and closed ended funds. Since it is traded on an exchange NAV/price changes at every moment during the trade hours (of course subjected to the liquidity in the fund) similar to a closed ended fund.
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January 26, 2010 | Filed Under
Mutual Funds |
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