3 Replies to “What is Return in MF? Annulised return and absolute return?”


  1. You brount Rs 100 Mfs
    Sold at Rs 120.

    Your return is 20% on investment on absolute.

    But if this invstment period is six month.

    Return per year is 40%. This annulised. taking into account of time factor.
    Annual return calculations are difficults. you have to multifly by (365/investmentdays)


  2. Simple example:

    If you bought a MF unit for Rs. 10 on 1-Jan-2006 and the NAV of that MF Unit is Rs. 18 on 1-Jan-2008 (that is, after 2 years) then:

    1. Absolute returns is 80%. This is a simple formula. (18-10)/10*100.

    2. Annualized return is 34%. This is a more involved calculation. This is also called CAGR (Compounded Annual Growth Rate). What this means is that if your investment of Rs. 10 had grown at 34% every year it would have been worth Rs. 18 after 2 years.

    The easiest way to calculate annualized return is to use the XIRR formula is MS Excel. If you can’t find it then press F1 and type XIRR and Excel will tell you how to get it.

    To Use XIRR, the above example would need to be entered as:

    1/1/2006 -10
    1/1/2008 18

    You need to enter -10 because that is an outflow and 18 is the inflow or potential inflow if you were to sell your unit.





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