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Measuring the risk of a mutual fund

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Learn 4 key ways to measure the risk of a mutual fund. Investing Made Simple walks through the fundamentals of investing in a simple and easy to understand manner using short videos to illustrate. This was one of my early videos and the music and ending leave a lot to be desired. I am now updating this channel consistently so please subscribe. ★☆★ Subscribe: ★☆★ https://goo.gl/qkRHDf Investing Basics Playlist https://goo.gl/ky7CJq Investing Books I like: The Intelligent Investor - https://amzn.to/2PVhfEL Common Stocks & Uncommon Profits - https://amzn.to/2DAV8h9 Understanding Options - https://amzn.to/2T9gFSp Little Book of Common Sense Investing - https://amzn.to/2DfFGG2 How to Value Exchange-Traded Funds - https://amzn.to/2PWSkRg A Great Book on Building Wealth - https://amzn.to/2T8AKZ1 Dale Carnegie - https://amzn.to/2DDAk8w Effective Speaking - https://amzn.to/2DBncAT Equipment I Use: Microphone - https://amzn.to/2T7JxL6 Video Editing Software - https://amzn.to/2RQM1vE Thumbnail Editing Software - https://amzn.to/2qIUAgP Laptop - https://amzn.to/2T4xA8Z DISCLAIMER: I am not a financial advisor. These videos are for educational purposes only. Investing of any kind involves risk. Your investments are solely your responsibility. It is crucial that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments. Please consult your financial or tax professional prior to making an investment. #LearnToInvest #StocksToWatch #StockMarket
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Text Comments (29)
Learn to Invest (5 months ago)
SORRY the background music is so bad. This was my first video. I think the quality of my new videos got much better. So if you like what you say, please hit subscribe!
chatting enabled (1 month ago)
Hello, What could be the choice if Alpha is 1 and Beta is lower but Standard Deviation is higher? This kind of scenario confuses. You have shown a scenario which has all goodies in it. Can you please show a comparison with other scenarios taken in mind?
Veeralinagappa H (2 months ago)
Pls reply me back
Learn to Invest (2 months ago)
Reply about what? :)
Veeralinagappa H (2 months ago)
Can you put alpha and beta formula
Learn to Invest (2 months ago)
My Alpha video https://youtu.be/NZq3ZKfU6IA My beta video https://youtu.be/s27-UKEqN4I
Diontae Daughtry (3 months ago)
Thank you this was very helpful and informative 👍👍
Learn to Invest (2 months ago)
I"m glad you liked it!
ABHIJEET BALAPURE (3 months ago)
Could you remove the annoying background music, more interested in content then music.
Learn to Invest (3 months ago)
For sure. I wish could. I've removed it in my more recent videos
Pothiraj Ramasamy (4 months ago)
very nice
John Zarznia (5 months ago)
Excellent Video! Great information.
javed khan (7 months ago)
How did u calculate alpha beta
Learn to Invest (7 months ago)
I actually just pulled alpha and beta off of morningstar.com for the funds I used.
TheDragonaf1 (7 months ago)
HOW ARE YOU CALCULATING ALPHA, BETA ETC.........
TheDragonaf1 (7 months ago)
Wonderful, and is my example above with the calculation of alpha correct by what you mean "total return" to be?
Learn to Invest (7 months ago)
Yes, for the sharpe ratio you want to use the total return.
TheDragonaf1 (7 months ago)
Okay that makes better seance. However in terms of the alpha for your video above (assuming you showed the S&P 500 for all three times lets say: "at 1 year return" S&P return = 13, "at 1 year return" S&P return = 14, "at 2 year return" S&P return = 15 Then by "total return" in this case do you mean (for fund 3) Alpha = (16.82+16.96+14.23) - (13+14+15) ? And if this number was lower than your annual risk free rate, you would invest in it? Also for the sharp ratio, again are you using a single value from the three times or the "total returns"?
Learn to Invest (7 months ago)
TheDragonaf1 so for alpha, a simple calculation is to take the total return (including dividends) of the fund and subtract the total return of the benchmark. Say the s&p 500. Beta is much trickier. That's why I say just pull it down from a data service like Morningstar. To calculate beta you need to do a regression analysis which compares volatility in the market to volatility in the fund. I hope this explains it well. If not, let me know, maybe I can make a clearer video on it. This video was my first and the background music really makes it tough to follow. Hopefully the other videos are clearer for you
TheDragonaf1 (7 months ago)
As in say you have your three funds and you have 5 years of worth of returns in months, you have your S&P 500 (the market returns), and you have an annual risk free rate, can you physically calculate the alpha, beta etc... to see which fund is less risky and better to invest in? if yes, how?
pavlo maystryuk (10 months ago)
did you even play the vid before posting, music is louder than the voice
Carine Coursol (1 year ago)
Thanks so much !
Morgan Kuschel (1 year ago)
I really appreciate the clear way that the information has been laid out. It should be laid out what type of investor the narrator is, however. In some cases, particularly with younger investors, when there is a long investment horizon volatility can be fine or even desirable. When you are Dollar Cost Averaging and rebalancing the account, the volatility can help get the best average prices for the funds you are buying. Also over a long time horizon, it is completely acceptable to take on more risk (within reason) to get a higher return.
Learn to Invest (7 months ago)
Great point, I've tried to pay more attention to this discinction in some of my more recent videos. Thanks for the feedback.
Joel Dsouza (1 year ago)
can't hear anything at all..
Rafiq Halani (2 years ago)
To the point presentation but background music sucks
dalip Kumar (1 year ago)
Rafiq Halani.
dalip Kumar (1 year ago)
Rafiq Halani sfed

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