How to look at the Traynor Index when buying funds?

It’s just that we may not pay much attention to these indicators in normal times and don’t know how to use these indicators, such as Sharpe ratio, maximum retracement, Treynor index and other indicators.

Below, the editor will introduce how to look at the Treynor Index when buying funds. I hope you will like it.

What is the Treynor Index? The Treynor Index is a commonly used indicator when we buy funds. The larger the value of this index, the better the quality of the fund.

The Treynor index, Sharpe ratio and Jensen index are known as the three classic indicators. All three indicators can be used to analyze the quality of a certain fund.

These three major indicators each have their own emphasis. The Treynor index and the Sharpe ratio are actually relatively similar. The Treynor index represents the risk premium brought by the unit's systematic risk, while the Sharpe ratio represents the risk premium in the investment portfolio.

, the excess investment rate of return per unit risk on a risk-free asset is simply the increment in expected return for each additional risk.

The Jensen index is an indicator of excess returns. If the Jensen index is greater than zero, it means better performance. If the Jensen index is equal to or less than zero, it means poor performance. Similarly, the bigger the Jensen index, the better.

The Treynor index, Sharpe ratio and Jensen index are all comprehensive indicators that can measure risk and return at the same time.

The Treynor index is a standard used by investors to judge whether the risks taken by fund managers are beneficial to investors. The higher the Treynor index is, the more beneficial the risks taken by fund managers are to investors. On the contrary,

If the Treynor Index is lower, then the risk taken by the fund manager is more detrimental to investors.

The calculation of the Treynor index is relatively complicated. For those of us who are not professionals, it is enough to know that the higher the Treynor index, the better. However, we should note that the Treynor index only considers

Systemic risk does not take into account unsystematic risk.

How to look at the Treynor Index when buying a fund? When we buy a fund, we can judge by looking at the Treynor Index of the fund. The higher the Treynor Index, the higher the risk premium it brings, which is good for investment.

The more favorable the investor is, the lower the Treynor index is, the lower the risk premium it brings, and the more unfavorable it is for investors.

We need to consider many aspects when choosing a fund. We cannot simply look at the Treynor index, but also Sharpe ratio, Jensen index and maximum drawdown and other indicators. We also need to check the size of the fund, the time of establishment and the fund manager.

Wait for comprehensive consideration.

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