How to evaluate your Large Cap Funds?
For any investor, the easiest way to select any fund is to look at their historical records. But as an investor, one must also look at other factors to evaluate before investing in large cap funds. Financial ratio does play a key role in evaluating the large cap funds.
An alpha is one of the most important metrics to measure the fund performance. It shows the ability of the fund manager to make a profit in comparison to the benchmark. The higher the value of the alpha, more is the ability of the manager to make a profit.
It provides the measurement of the risk adjusted return of a portfolio. In case, if an investment fund has a higher Sharpe ratio, which means that the portfolio is quite superior to their respective peers.
Standard Deviation is basically used by investors to predict a range of returns for various mutual funds. Mainly it indicates the volatility of an investment from its annual rate of return. A stock with having a higher deviation will have a larger price range vis-a vis to stocks with a low standard deviation.