Question

A high p/e multiple of a fund in comparision to average market multiple could be of

Answer 1

The PE multiple is the average of the PE of all the stocks that make up its portfolio, in proportion to their allocation within the portfolio.

Investors tend to attach much importance to the price-to-earnings (PE) ratio and market capitalisation of a stock while buying. When used in conjunction with other metrics, these numbers can help in picking the right stock at the right time. But can they also help select the right mutual funds? You may find it difficult to ascertain the investing style and preferences of the fund manager only by looking at the fund portfolio. This is where the fund’s PE ratio and average market capitalisation become good reference points. You can make more informed decision using these numbers.