The PE ratio of mutual fund is price by earnings ratio. It simply tells you how much you are paying to earn Rs 1. If the PE ratio is 25, you are paying Rs 25 to earn Rs 1, a 4% return.
This is certainly making things too simplistic as the earnings will keep growing for the companies which are part of the mutual fund.
There is no hard and fast rule but a PE ratio of 20 and less is preferable. The other side is that a high PE atio indicates that people are ready to pay higher price for the fund because the market believes that the fund value can grow faster.
While the P/E Ratio is based on the company’s earnings, the P/B ratio takes its book value instead.
Book Value of a company is the net value of all its assets after deducting all liabilities. In other words,
Book Value = Total Assets-Total Liabilities
It indicates the amount of money an investor has to invest for the net assets of the company. Since the market value of a share is usually higher than its book value, the P/B is typically greater than 1.
A high P/B Ratio is an indicator that investors expect the management of the company to generate more value from the given assets
https://economictimes.indiatimes.com/interpreting-p/b-ratio/articleshow/813397.cms?from=mdr
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