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coolsam
20-04-2009, 01:24 PM
Return on MF -

Hey,

Has anybody a idea as to how to calculate return on a Mutual Fund?

Regards,
Sam

Ram Naresh
24-04-2009, 05:54 PM
Formula to calculate annualised returns in Percentage for Mutual Fund -

{[(Current NAV/Purchase NAV) ** (365/ N)] - 1} * 100

Where -

N = No of days from purchase

** means - "Raise to the Power"

coolsam
04-09-2009, 03:49 PM
I am not able to understand the above calculation. Could you please tell me in very simple terms with an example (if possible)?
Sorry! I am not very good in maths.

Ram Naresh
04-09-2009, 04:00 PM
Following illustrations would help you in understanding of the above formula usage -
Example 1
You bought a fund at an NAV of Rs.25.32/-
The NAV appreciated to Rs.33.45/- in 8 months i.e., 240 days.
Then, the annualized return as calculated using MS-Excel is:

fx=POWER(number,power)-1
=POWER(33.45/25.32,365/240) - 1
=POWER(1.321,1.521)-1

which is 0.5272 or in other form, 52.72%

Ram Naresh
04-09-2009, 04:01 PM
Example 2
You bought a fund at an NAV of Rs.12.86/-
The NAV went down to Rs.9.14/- in 3 months i.e., 90 days.

Then, the annualized return as calculated using MS-Excel is:
fx=POWER(number,power)-1
=POWER(9.14/12.86,365/90) - 1
=POWER(0.7107,4.0555)-1

which is -0.7497 i.e., -74.96% (the negative sign indicates loss)

Hope now its more clear to you.