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How to calculate Mutual Funds Returns?

Mutual Funds are a financial vehicle that includesa pool of money collected from investors. The fund managers then invest that money in a horde of securities like Stocks, Bonds, and other assets. Their aim while choosing the asset is to make sure they produce the highest possible returns for the investors. But how to calculate Mutual Fund returns if you are the investor and not a fund manager? Should you take help from a Mutual Fund calculator or do it independently?

While taking the help of theMutual Fund Return calculatoris a brilliant idea, you can also carry out the calculation yourself. Let us discuss some ways to do that. We will also discuss how to calculate the three most important types of returns:

  1. Absolute return
  2. Annualised return
  3. Compounded Annual Growth Rate (CAGR)

Absolute return

These are the increase (or decreases) in your investment percentage-wise. This is usually used for Mutual Funds whose tenure is less than a year. The formula for calculating absolute return is:

Absolute return = (present NAV – initial NAV)÷ initial NAV × 100

The NAV orNet Asset Value of Mutual Funds is its unit price. The NAV gets decided at the end of the trading day by combining the prices of all the securities that the Mutual Fund invests into. 

Annualised return

If the Mutual Fund’s tenure is over a year, calculate the annualised return and not the absolute one. It also measures how much your investment has grown in a year. The formula for calculating annualised return is:

Annualised return = [(1+absolute rate of return) ×(365÷number of days)] – 1

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The totalreturn rate for Mutual Funds is the return it offers without comparing it to any benchmark index. 

Compounded Annual Growth Rate

What if you want to calculate a return for more than a year and Lumpsum Investment? This is where CAGR calculation helps. Your investment might give different returns at different times. But CAGR however, offers the average annual growth rate. Here is how to calculate CAGR:

CAGR = [{(present NAV÷initial NAV)×(1÷number of years)}-1]×100

How does the calculator work?

Use theMutual Fund SIP calculator to compute returns based on the expected rate of return. The calculator offers the final maturity amount paid to you. You only need to add your investment amount and the predicted rate of return. Alternatively, you can also put in the amount you are expecting on maturity to predict the rate of return. 

Disclaimer: ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. – ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400025, India, Tel No : 022 – 2288 2460, 022 – 2288 2470. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730) and BSE Ltd (Member Code :103) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Composite Corporate Agent License No.CA0113, AMFI Regn. No.: ARN-0845. PFRDA registration numbers:  POP no -05092018. We are distributors of Insurance and Mutual funds, Corporate Fixed Deposits, NCDs, PMS and AIF products. We act as a Syndicate, Sub -syndicate member for IPO, FPO. Please note that Mutual Fund Investments are subject to market risks, read the scheme related documents carefully before investing for full understanding and detail. . ICICI Securities Ltd. acts as a referral agent to ICICI Bank Ltd., ICICI Home Finance Company Limited  and various other banks / NBFC for personal finance, housing related services etc. & the loan facility is subjective to fulfilment of eligibility criteria, terms and conditions etc. NPS is a defined contribution plan and the benefits would depend upon the amounts of contributions invested and the investment growth up to the point of exit from NPS. Insurance is the subject matter of solicitation. ICICI Securities Ltd. does not underwrite the risk or act as an insurer. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.

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The non-broking products / services like Mutual Funds, Insurance, FD/ Bonds, loans, PMS, Tax, Elocker, NPS, IPO, Research, Financial Learning etc. are not exchange traded products / services and ICICI Securities Ltd. is only acting as a distributor/ referral Agent of such products / services and all disputes with respect to the distribution activity would not have access to Exchange investor redressal or Arbitration mechanism.

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