R Squared

R-squared is a historical measure which indicates how closely a fund's past fluctuations have correlated with the fluctuations of its benchmark index. R-squared vales range from 0 to 1.0, or 0% to 100%. In Public Mutual, we are using 0 to 1.0.

0 means that a fund's returns have noc correlation with a benchmark's fluctuations while 1 indicates that a fund's return s are completely correlated with the benchmark's return.

Thus, if R-squared is less than 0.7 (my opinion), there is no point to look at Beta, as beta measure a fund's sensitivity to movements in the benchmark index.

More useful R-squared is more than 0.85. It indicates the fund's performance patterns have been in line with the benchmark.