Did you know that you could check the valuation of your mutual fund scheme? Well, it’s a very real thing and it can help investors in making more informed decisions.
A scheme's price to earnings (PE) is simply the weighted average of the stocks or you can say it is the average of the PE of all the stocks in proportion to the allocation in a scheme's portfolio. So, a high PE means most stocks are quoting at a premium which indicates a preference for growth or the style of the fund manager.
Conversely, a low PE would indicate a fund manager's value approach to investing.
Watch the accompanying video of CNBC-TV18’s Sumaira Abidi for more details.