Why mutual fund beta matters
12 Jan 2023
Beta measures the volatility of the mutual fund portfolio vis-à-vis the Investment. The market usually refers to the benchmark index of the mutual fund.
In the diagram below
If the mutual fund beta is 1.1
it means the mutual fund is more volatile than the index.
If the mutual fund beta is 1
it means the mutual fund beta is as volatile as the index.
if mutual fund beta is 0.9
it means the fund is less volatile than the index
The investors should prefer funds with lower beta to tackle Volatility but at the same time should have a higher up capture ratio.
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