Data Analysis of a Mutual Fund

1076 Words Jun 16th, 2008 5 Pages
The aim of this paper is to analyze the performance of a mutual fund by applying statistical tools and secondary research on the previous ten years’ annual returns of the fund and coming up with a conclusion based on the results of the findings. Analysis of the previous ten years’ annual returns will be used to analyze the risk and return of the mutual fund and propose suitable conclusions pertaining to future investments in the mutual funds.
The mutual fund under consideration has not displayed a consistent upward or downward trend. It seems that market forces and the external environment have played a great role in influencing the returns of the mutual fund. The annual returns of the mutual fund for the past ten years are as follows:
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we are trying to evaluate the range of return we can be sure that 88.89% of the times the returns will be in that range.

Thus, we can be 88.89% sure that the returns of the mutual fund will lie between -2.7% and 27.28%. This gives a rough idea that this mutual fund is more skewed towards the positive side of returns. It does not seep much into the negative returns. This proposes the fact that the mutual fund is a high risk fund with a greater portion of the risk reaping positive returns rather than negative returns.

The mutual fund investment is a very good opportunity to get a high premium on investments although it possesses a higher degree of risk than other mutual funds. The mutual fund shows great potential for reaping higher returns but there is greater risk associated with this mutual fund than with other funds in the industry. (Mutual Fund Investment Strategies)
The conclusion to be drawn from the above analysis is: investment in this mutual fund is not a bad option if the investor is ready to take a significantly higher amount of risk apart from the existing market risk. Although there is no guaranteeing of any positive or negative returns, the mutual fund generally looks to give a return of about 12% to 15%. However, there is a greater amount of risk in this investment than in other investments. The 88.89% confidence interval projects a solid positive range of returns in
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