All about Mutual Fund Returns
02 Nov 2023
All about Mutual Fund Returns
Mutual fund returns are important because they indicate how well an investment has performed over time, helping investors assess the fund's profitability and suitability for their financial goals.
Returns are the gains or losses generated by an investment over a specific period of time. In the context of mutual funds, let’s dig deeper into several types of returns that investors should keep in consideration.
|Name of the Fund
|Baroda BNP Paribas MultiCap Fund
Absolute returns represent the actual percentage change in the value of an investment over a specified period of time. For example, if you invest Rs.1,000 in the above fund and after a year it has grown to Rs1,200, your absolute return is 20% (200 gain / 1,000 initial investment).
CAGR (Compound Annual Growth Rate) is the annualized rate of return on an investment over a specified period of time. It allows you to compare the fund's performance to other investments or to set realistic expectations for future returns based on historical data.
XIRR- Unlike CAGR (Compound Annual Growth Rate), which assumes a consistent rate of return over a specified period, XIRR is useful where there are multiple cash flows. It is particularly useful for investments where contributions or withdrawals occur at different points in time in case of SIP, SWP.
Understanding the different types of mutual fund returns is crucial for making informed investment decisions. Each type of return provides a unique perspective on the fund's performance, and investors may use multiple metrics to assess their investments.
It's important to remember that past performance is not indicative of future results, and investors should conduct thorough research and consult with financial advisors before making any investment decisions.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. The information provided is generic in nature and is for informational purpose only. Please consult your financial advisor before taking any decision.
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