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© Dhuraivel Gunasekaran What is Beta in mutual funds?

In equity investing, for higher returns, you must take risks. It seems like a slippery slope but thankfully there is the Beta ratio. It tells you how much risk your scheme takes, compared to its benchmark index. If the scheme’s Beta is more than 1, the scheme is more volatile than its benchmark. If it is less than 1, then the scheme is less volatile. A Beta of 1.2 means that the scheme is 20 per cent more volatile than its benchmark. An index fund’s or an ETF’s Beta is typically 1 because it mimics the index. If you are conservative, choose a scheme with less Beta, though a high Beta is not always bad.

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