Category P/E is simply the average P/E of all the funds in a given category.


For example : There are 5 funds in the small cap category with the following P/Es:


Fund

P/E

A

25

B

27.5

C

30

D

32.5

E

35


The category P/E in this case will be 30.


The category P/E alone might not add value but individual fund P/Es can be compared to their respective category P/Es to find undervalued funds with upside available.