Can anybody please explain how return is calculated in mutual fund investments? I have many doubts here.
1. According to investmentogi website, the return of magnum taxgain is -2.18% over last three years. Does this mean if someone invested in it exactly three years ago (lumpsum) will get 2.18% less amount than the invested amount after full redemption today?
2. It seems one possible way to calculate return is to first find out number of units purchased at the time of lumpsum investment(a) and to find the value of the units at the time of redemption(b). The return will be (b-a)*100%/a. Is this correct? But then how can one calculate say annual return in the case of SIP? here investment is made every month and how do we define "annual" return?
3. If the above formula for return calculation is correct then to maximize gain, one have to sort of "time the market" to find out best time to exit investment. Is this idea true?
1. According to investmentogi website, the return of magnum taxgain is -2.18% over last three years. Does this mean if someone invested in it exactly three years ago (lumpsum) will get 2.18% less amount than the invested amount after full redemption today?
2. It seems one possible way to calculate return is to first find out number of units purchased at the time of lumpsum investment(a) and to find the value of the units at the time of redemption(b). The return will be (b-a)*100%/a. Is this correct? But then how can one calculate say annual return in the case of SIP? here investment is made every month and how do we define "annual" return?
3. If the above formula for return calculation is correct then to maximize gain, one have to sort of "time the market" to find out best time to exit investment. Is this idea true?