Multiple choice

Of the following, which type of fund would have a higher PIE multiple in comparison to the average market multiple?

  1. A Value Fund

  2. A Growth Fund

  3. An Index Fund

  4. Could be any of the above three, one cannot generalize
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Growth funds invest in companies expected to grow at an above-average rate, which typically have higher PIE (Price to Earnings) multiples than the market average. These companies trade at premium valuations due to their growth potential. Value funds invest in undervalued companies with lower PIE multiples, while index funds reflect the market average.

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