Parameters of Mutual Fund Investment

I have been investing in mutual funds for the last two and was happy to read about the information ratio special report in your last issue. But my question as an investor is - Other than information ratio what are the other parameters that need to be assessed when investing in mutual funds? - Nilesh Ojha [EasyDNNnews:PaidContentStart]

Editor Responds : Thank you for writing to us. When investing in mutual funds, it's important to consider a variety of parameters beyond the information ratio to make a wellinformed decision. You need to analyse the expense ratio, historical performance, standard deviation, and Sharpe ratio to understand risk and return. Assess alpha and beta for performance relative to benchmarks and market sensitivity. The fund manager’s track record, asset and sector allocation, and portfolio turnover ratio are also crucial. Evaluate yield for income-focused funds, liquidity for ease of transactions, and minimum investment requirements. Additionally, consider tax efficiency, dividend distribution policy, and the fund's investment philosophy and strategy to ensure alignment with your goals and risk tolerance. By evaluating these parameters, you can gain a comprehensive understanding of a mutual fund's potential risks and returns, and make more informed investment decisions.

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