Mutual fund return refers to the profit or gain an investor earns from their investment in a mutual fund over time. It represents how well the fund has performed and helps investors measure the growth of their money.
Types of Returns:
Absolute Return – Total gain/loss over a period (used for less than a year).
Annualized Return – Average yearly return (used for over a year).
Compounded Annual Growth Rate (CAGR) – Standard way to show long-term performance.
XIRR – Used when investments are made at irregular intervals (e.g., SIPs).
How Returns Are Earned:
Capital appreciation – Rise in the fund’s NAV.
Dividends – If the fund declares periodic payouts.
Interest income – From debt instruments held by the fund.
Why It Matters:
Helps compare fund performance.
Essential for financial planning.
Affects goal achievement like retirement or education.