analyzing mutual funds for maximum return. mutual fund analysis typically consists of a very basic analysis of the fund’s strategy (growth or value), median market cap, rolling returns, standard deviation and perhaps a breakdown of its portfolio by sector, region, etc. … (for more, check out analyzing mutual fund risk.)
the majority of investors aren’t trained in fundamental analysis and don’t know how to read a candlestick share chart. most investors are just looking for a relatively safe place to save their money and hope to earn a decent return along the way, and that’s why ratings companies such as morningstar, inc. (nasdaq: morn) and lipper, inc. are so important.morningstar and lipper are two of the most prominent names in the mutual fund world. if a fund is determined to be in the top 20% in a specific quintile, it gets the title of “lipper leader” for that feature.morningstar and lipper ratings are widely published, so many people accept them as accurate.
equity funds were segregated by market capitalization (the size of the equities in the fund) to prevent large-cap funds from consistently dominating the ratings.today, morningstar organizes mutual funds based on the types of investments in a fund portfolio, the region where fund investments are made and the overall management strategy. lipper lists all five ratings for any given mutual fund and lets investors decide which is most important to them.each category is assigned a rating on a scale of one to five. lipper also throws in an overall period that dates back to a mutual fund’s inception.the core of a mutual fund rating system is built around risk-adjusted measures – how much potential for future losses an investor has to assume in order to earn a return.for both morningstar and lipper, the risk-adjusted measure is based on a comparison to the average performance for a given fund category.
the analysis can be as simple as listing the fund and relevant indexes side by side with a breakdown by sector. for example, for a large cap manager, the simplest way to determine sector reliance is to place the fund’s sector breakdown next to both the sandp 500 growth index and the sandp 500 value index. there are many variables to consider when buying a mutual fund. should you buy the what to look for (and what to ignore) when analyzing mutual funds. there is more to analyzing mutual funds than performance history. you’d have good reason to be excited about a mutual fund that had a how to analyze mutual fund financial statements, mutual funds analysis tools, upside downside capture ratio calculation, how to analyse mutual funds performance, calculating upside capture in excel, mutual fund performance analysis excel, mutual fund performance analysis pdf, how to analyse a fund fact sheet
investors should pay close attention to the level of difference between a mutual fund and its comparative index. lipper blends its mutual funds based on both classifications (which are holdings-based) and categories (which are based on the fund objective language in the prospectus). lipper is better on customization, depth and tracking persistent performance among like-funds.