Calculating Beta of the Mutual Fund Portfolio

Mastering Mutual Fund Investment: Part 3 of 3 Calculating Metrics for a Mutual Fund Portfolio
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Transcript

Hello, welcome back. So far we have seen how to calculate the expected returns and the standard deviation of a mutual fund portfolio. Next In this video, we see how to calculate the beta for a mutual fund portfolio. To calculate the beta for mutual fund portfolio, we need to find the weighted sum of all the individual beta of the mutual funds which are there in the mutual fund portfolio. We will use the following notations to express the formula for calculating beta for a mutual fund portfolio beta p will represent the beta for the mutual fund portfolio, beta i is a beta for the higher mutual fund in the mutual fund portfolio. And why is the weight of the higher mutual fund in the mutual fund portfolio.

So, we can write the formula for calculating beta for a mutual fund portfolio as beta p is equal to summation over i is equal to one to n off Wi Fi into beta or we could Write the formulas beta p is equal to W one beta one plus w two beta two and so on up to w n beta and we will use Excel to calculate the beta for a mutual fund portfolio. So, in Excel, we can simply use the function sum product. Now, let us see how to calculate beta for a mutual fund portfolio using Excel and here we have the Excel where we have the details of the mutual fund portfolio that we are using as a sample. The betas are given here weights are given here now, we say the function sum product. So, we found the first parameter as the betas of the different mutual funds and then the weights of the different mutual funds.

So, we get a beta of 0.845 Thank you for listening. See you in the next lecture.

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