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Mutual Fund performance measurement with Standard Deviation
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Our source of information is from the fact sheet
First let us see *Standard Deviation*
Standard deviation is a statistical measure of the *range* of an investment’s performance.
When a mutual fund has a high standard deviation..
it means its range of performance is wide
that means the scheme will have greater volatility.
Standard Deviation of 18.72%
That is the example of DSPBR Equity scheme we discussed yesterday
From the fact sheet
Now if i take another scheme and compare, i can get to know which one will have greater volatility
For instance, i take ICICI Prudential Value Discovery Fund - Direct Plan which has 17.2
so comparatively, DSPBR, being 18.7 will have greater volatility over ICICI Prudential Value Discovery Fund
If grater volatility is there, our predictibility of returns will be less got it?
Typically what value is high when it comes to SD?
Or it should only be seen in comparative way
Mostly used comparatively between two schemes or within the same scheme for different period - like from June and July fact sheets
In general, Equity-oriented funds have higher SD because equity shares are more volatile.
Debt-oriented funds have less SD, like 1% or 2%, because debt securities are not that volatile and give fixed returns.
- Understanding Mutual Fund Factsheet
- Evaluating of Mutual Fund Schemes
- Comparing Mutual Fund Schemes
- Mutual Fund performance measurement with CAGR
- Mutual Fund performance measurement with Standard Deviation
- Mutual Fund performance measurement with Sharpe Ratio
- Mutual Fund performance measurement with Beta
- Mutual Fund performance measurement with XIRR