How is return calculated in mutual fund investments?

#1
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?
 
#2
Typically for all equity, MF and Debt instruments like FD, CAGR is the measure used for measuring the returns. More details can be obtained from Wikipedia where there are some illustrative examples.

Happy Investing !!
 
#6
Normally for all equity, MF and Debt instruments such as FD, CAGR is the measurement which is used for measuring returns. One of the easiest ways that you can follow is to opt for a historical analysis of returns. For this, you can consider either point-to-point returns or rolling returns.
 
#7
In straightforward terms, "return" is the yeild that your investment produces over timeframe. It is the rate increment or descrease in the estimation of the interest in that period. The arrival on ICICI prudential mutual fund for a specific predetermind period is figured as: Current NAV - Past NAV *100
 
#9
how is CAGR calculated?


Is it like if am expecting 12% return per year then after 5 year my total rate of interest should be 12%*5 years = 60%?? is that what i should expect? i think thats not possible?But i read somewhere its calculated that way only.



Or i should say if i am saying 12% return am getting on my mutual fund then it should remain showing me total returns 12% every year no matter what? that means every year its yielding me 12% profit?? but now again the profit stays there I am not taking it out.


So can someone clarify? if i stay invested and say I have invested 20 thousand for 5 years so if in 1st year it showed me 12% return and at the end of 5 years the itnerest is 12 % what is my actual profit?

Thanks in advance.