Evaluating Mutual Funds

Flashcards summarizing key terms and concepts from the lecture on evaluating mutual funds.

Mutual Fund Performance

The assessment of a mutual fund's returns, risks, and costs compared to benchmarks and peer groups.

Benchmark Index

An index that reflects a mutual fund’s investment universe and can be used as a standard to measure performance.

Comparison Universe

A group of mutual funds that have similar asset classes and risk profiles used to assess relative performance.

Quartile

A method of ranking performance into four equal parts; used to compare mutual fund managers against their peers.

Sharpe Ratio

A measure used to calculate the risk-adjusted return of a portfolio, comparing excess return to standard deviation.

Total Return

The overall gain or loss made on an investment, including interest, dividends, and capital gains or losses.

Risk-Adjusted Return

A method of measuring the return of an investment compared to the risk taken to achieve that return.

Survivorship Bias

A bias that occurs when only successful funds that are still operating are considered in performance comparisons.

Performance Assessment

The process of comparing a mutual fund manager’s results with established benchmarks to evaluate performance.

Performance Measurement

The calculation of the return realized by a portfolio manager over a specified evaluation period.