It is very important to understand 5 important mutual fund ratios you should know. that affect investment returns while investing in mutual funds.

The first ratio is the expense ratio. It is a fee charged by a mutual fund to cover operating expenses, expressed as a percentage of the fund's average investment value. A lower expense ratio is generally considered better because it allows investors to earn higher returns.

The second ratio is the load/no load ratio. It is a sales fee or commission paid to a broker or financial advisor for buying or selling mutual funds. No load funds use this fee, but some investors are willing to pay a fee in such a fund if they believe the fund's performance ratings are worth it.

Third, the Sharpe ratio. This measure is a risk-adjusted form of a mutual fund's return, determined by comparing it with its volatility. A higher Sharpe ratio indicates that the fund has generated better returns for each unit of risk taken.

Fourth, Alpha. It compares the mutual fund's performance with its benchmark index. A positive alpha indicates productivity, while a negative alpha indicates underperformance of the index below. A high alpha indicates that the operator is adding value through its investment decisions.

Lastly, beta. This measure compares the mutual fund with the market to understand its volatility. A lower beta represents an investment with lower risk, while a higher beta represents a riskier investment with higher returns.

By understanding 5 important mutual fund ratios, you can make informed investment decisions that match your financial goals and risk appetite.