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Thread: How to calculate return on MF ?

  1. #1
    PolicyWala Newbie
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    Default How to calculate return on MF ?

    Return on MF -

    Hey,

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

    Regards,
    Sam



  2. #2
    PolicyWala NewBie
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    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"

  3. #3
    PolicyWala Newbie
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    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.

  4. #4
    PolicyWala NewBie
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    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%

  5. #5
    PolicyWala NewBie
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    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.


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