Mutual Funds · advanced
Risk, Return & Performance
How mutual fund returns and risk are measured and shown: CAGR, XIRR and rolling returns, volatility, beta and risk-adjusted ratios, benchmarks and alpha, attribution, SEBI's performance-disclosure rules, and how to read a factsheet and a portfolio.
- 01Measuring Returns — CAGR, Absolute, XIRR, Rolling ReturnsA fund's return can be stated as an absolute return, a CAGR, an XIRR or a set of rolling returns. This lesson explains what each one measures, when it is used and how SEBI requires scheme returns to be shown.
- 02Benchmark & Alpha — Beating the IndexA benchmark is the index a scheme's performance is compared with, and alpha is the return above what the scheme's sensitivity to that index would predict. This lesson covers SEBI's benchmark rules, the Total Return Index, and how alpha is worked out and read.
- 03Risk Measures — Standard Deviation, Beta, Sharpe RatioRisk measures put numbers on how much a fund's returns have varied and how much return came with that variation. This lesson explains standard deviation, beta, the Sharpe, Sortino and Treynor ratios, the Information Ratio and maximum drawdown.
- 04Understanding Mutual Fund FactsheetsA factsheet is a short periodic summary of each scheme: what it holds, how it has performed and how risky it is rated. This lesson explains the main figures for equity and debt schemes, the riskometer and the Potential Risk Class.
- 05Performance Attribution — What Drives Returns?Performance attribution splits the gap between a fund's return and its benchmark's return into the decisions that produced it. This lesson explains the allocation and selection effects, the interaction term, and what attribution can and cannot show.
- 06SEBI Norms for Representing ReturnsSEBI sets rules for how a scheme's performance is shown in disclosures and advertisements. This lesson covers the periods and method, the benchmarks shown alongside, the rules for young schemes and short-term debt funds, and what advertisements may not do.
- 07Reading Fund Performance — Past Performance vs FuturePast performance is the main information available about a fund, but it does not show what comes next. This lesson explains measures that show how results varied: rolling returns, capture ratios and maximum drawdown, and what each can and cannot say.
- 08Portfolio Analysis — Top Holdings, Sector Allocation, AUMPortfolio analysis looks at what a scheme actually holds: how concentrated it is, where it differs from its benchmark, how much it trades and how far it overlaps with other schemes. This lesson explains each reading and the two formulas behind turnover and overlap.