Sample interview questions: How do you evaluate the financial performance of different investment funds or asset classes?
Sample answer:
1. Quantitative Analysis
- Return on Investment (ROI): Calculate the percentage gain or loss of an investment relative to its initial cost.
- Annualized Return: Determine the average annualized return over a specific period, considering compounding effects.
- Risk-Adjusted Returns: Assess returns in relation to the level of risk taken, using metrics like Sharpe ratio or Sortino ratio.
- Volatility: Measure the variability of returns using standard deviation or beta coefficient.
- Correlation: Analyze the degree of correlation between different investments to evaluate diversification potential.
- Historical Performance: Review past performance to identify trends, patterns, and potential indicators of future results.
2. Qualitative Analysis
- Fund Management: Investigate the experience, track record, and investment philosophy of the fund manager(s).
- Fund Objectives and Strategy: Understand the stated investment objectives and the strategy employed to achieve them.
- Expense Ratio: Determine the percentage of assets charged as management fees and expenses.
- Investment Process: Identify the due diligence, research, and decision-making processes used by the fund.
- Regulatory Compliance: Verify that the fund adheres to all ap… Read full answer