How do I interpret the Price/Earnings, Price/Book, 5-Year Earnings Growth Percentage, and Average Market Capitalization numbers in the Statistics box?
All of these figures provide useful information about a mutual fund’s portfolio. We calculate the numbers from the fund’s actual holdings as of the date at the top of the box. Unfortunately, there are times when information is not available for these data points, so, to help investors better utilize the numbers we present, the percent of the stock portfolio used to compute the figures is listed. To facilitate the comparison between both the index and other funds, relative numbers are listed as well. Price/Earnings, commonly known as P/E, is a measure of relative value. Essentially, it is the company’s price divided by its earnings. In general the higher the P/E, the more you are paying for earnings. Stocks with P/Es above 20 are considered growth oriented, while those with lower P/Es are considered value oriented. Investors can use the statistics provided on the page to be certain that a portfolio manager is actually following the discipline that he/she says is being applied. If manage
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