Analyzing Funds
Hi all,
I am currently working at an Asset Management internship and my team has given me a couple of assignments to get started on. One of the assignments is to analyze a couple of funds and determine if they would make good investments. They really want to see how I conduct my research. I would appreciate any advice on how best to go about evaluating a fund. For instance, what is the performance over ten years, management experience, take the expense ratios into account, etc. Thank you very much.
Look up Jensen's Alpha, Sharp Ratio and Treynor Ratio. Use the appropriate benchmark and calculate these measures for all the funds (Sharpe Ratio may be given in marketing materials). If it's a domestic equity fund it's probably S&P 500, bond fund is probably Barclay's Aggregate index, but make sure you look it up as it may be different. Performance percentiles are big...look up the funds on Morningstar's website to see what the 10 year percentile is.
They'll definitely want to know management's track record. Find out if the funds have switched managers recently. If they have, track the manager's previous performance and make a note of it. Maybe copy and paste their bios in whatever report you're giving. Finally, try to search for the fund names on mutualfundwire, seekingalpha, etc. to see if there's any major news on the funds that the team would want to know about. Hope this is helpful.
Great! I really appreciate this. This is very helpful and gives me a good basis to get started from! Thanks for the help!
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