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Mutual Funds – it can’t get bigger than this!

Mutual Fund Returns

Mutual Funds are one of the best investment plans that offer higher returns and offers diversification. The investment in assets are divided between debt and equities. Higher risk with better opportunity for returns is the feature of funds that are more into equities. These assets perform better than other asset classes.

Types of Mutual Fund Returns

Absolute Returns – Absolute Returns or Point-to-Point returns indicates the increase or decrease in investment, in terms of percentage. The time taken for this change is not accounted for. The absolute returns method of calculating returns is used for mutual funds with a tenure less than 1 year. If the period is more than one year, the investor has to calculate annualized returns.

Mutual Fund Returns

Example of Absolute Return calculation: Suppose the current market value of the investment is Rs. 4, 00,000 and the amount originally invested was Rs. 2, 50,000. In this case, the absolute return would be - [(4, 00,000-2, 50,000)/2, 50,000] = 60%.

Annualised Return – As the term implies, annualised returns measure the amount of growth in the value of your investment on an annual basis. For instance, let’s say that you made an investment of Rs.1 lakh in a MF scheme. In a span of three years, your investment has grown to Rs.1.4 lakh. In this case, your absolute return is 40%, but your annualised return is 11.9% because of the compounding effect.

Total Return – It refers to the actual returns you have accrued from the investment. It includes dividends as well as capital gains. For instance, let’s say that you made an investment of Rs.1 lakh in a MF scheme, and the NAV was Rs.20. Since you made purchases worth Rs.1 lakh and the NAV is Rs.20, it means that you purchased 5,000 units. After a year, the NAV of the MF scheme increases to Rs.22, and the value of your units will be Rs.1.1 lakh (5,000 units x Rs.22 per unit), which means your capital gains shall be Rs.10,000. Now, in case the scheme declared dividends of Rs.2 per unit over the course of the year, the overall dividend paid to the investor shall be Rs.10,000 (5,000 units x Rs.2 per unit). Therefore, your overall accrued return shall be Rs.10,000 + Rs.10,000 (dividend + capital gains) = Rs.20,000, which makes your overall return = 20%.

Trailing Return – It is the annualised return over a particular trailing period which ends today. For instance, if the NAV of a MF scheme today is Rs.100, and it was, let’s say, Rs.60 three years ago. The formula to calculate trailing return in a Microsoft Excel sheet is (Today’s NAV / NAV at the beginning of the trailing period) ^ (1/Trailing Period) – 1. Therefore, your three-year trailing return will be 18.6%. In case the scheme’s NAV five years ago was Rs.50, the five-year trailing return shall be 14.9%.

Point to Point Return – It is the annualised return recorded between two points of time. All you need to calculate point to point returns is the start date and the closing date of a mutual fund scheme.

Annual Return – As the term suggests, annual return essentially refers to the return earned from a scheme between the 1st of January and the 31st of December of a particular year. For instance, in case a scheme’s NAV on the 1st of January is Rs.100 and on the 31st of December is Rs.110, your annual return shall be 10%.

Rolling Returns – They refer to a scheme’s annualised returns over a particular period of time. Rolling returns periods can be daily, weekly or monthly and shall be used until the last day of the duration in comparison with the benchmark of the scheme (for instance, Nifty, CNX – Midcap, CNX – 500, BSE – 200, BSE – Midcap, etc.) or fund category (for instance, midcap funds, large cap funds, balanced funds, diversified equity funds, etc.)

Compound Annual Growth Rate is used to calculate the returns from mutual funds investment which has a holding period that exceeds a year. This would reduce the short-term fluctuations and volatility of the Net Asset Value of the funds. Under this method of calculating returns from mutual funds, it is assumed that the investment is growing at a steady pace

In order to calculate the Compound Annual Growth Rate (CAGR) manually, the equation is as follows:

CAGR = [(Current Net Asset Value / Beginning Net Asset Value) ^ (1/number of years)]-1

Mutual Fund Returns Calculator

You can use the mutual fund returns calculator online to understand how much returns will be yielded from the capital invested. All you have to do is enter basic details such as name of the mutual fund, scheme/ plan, the “from” and “to” date for returns and then click on “Calculate”. The results page would project the annualized returns and absolute returns availed during a period from 1 week to a maximum period of 5 years. Most mutual fund returns calculator also projects the performance rank of the scheme, within fund classes.

Estimated Returns from Various Mutual Funds in India

Returns from Moderate Risk Equity Funds

Scheme Name 1 Year 3 Years 5 Years
Aditya Birla SL Frontline Equity Fund (G) 9.47% 10.50% 16.82%
DSPBR Equity Opportunities Fund – Reg (G) 10.67% 10.67% 14.76% 20.18%
Franklin India Bluechip Fund (G) 9.42% 10.29% 18.98%
ICICI Pru Focused Bluechip Equity Fund (G) 13.18% 11.03% 16.78%
Invesco India Dynamic Equity Fund (G) 13.46% 10.59% 15.49%
Invesco India Growth Opp Fund (G) 21.45% 13.34% 19.46%
Kotak Select Focus Fund (G) 8.55% 13.40% 20.77%
Mirae Asset India Equity Fund – Reg (G) 13.44% 13.71% 20.76%
Parag Parikh Long Term Equity Fund – Reg (G) 15.97% 11.44% N/A
SBI BlueChip Fund – Reg (G) 12.03% 11.50% 18.15%

Returns from High Risk Equity Funds

Scheme Name 1 Year 3 Years 5 Years
Aditya Birla SL Equity Fund (G) 11.87% 14.58% 22.11%
Franklin India Prima Fund (G) 9.90% 14.75% 25.91%
Franklin India Smaller Cos Fund (G) 14.04% 17.00% 30.52%
HDFC Mid-Cap Opportunities Fund (G) 12.60% 16.99% 27.09%
ICICI Pru Value Discovery Fund (G) 7.37% 8.24% 21.09%
L&T India Value Fund – Reg (G) 9.08% 16.44% 25.93%
Mirae Asset Emerging Bluechip – Reg (G) 11.25% 20.10% 30.57%
Motilal Oswal Multicap 35 Fund – Reg (G) 13.91% 17.28% N/A
Principal Emerging Bluechip Fund (G) 15.76% 17.69% 27.54%
Sundaram Mid Cap Fund (G) 10.08% 16.92% 26.87%

Returns from Moderate-Risk Tax-Saving Funds

Scheme Name 1 Year 3 Years 5 Years
Axis LT Equity Fund (G) 20.24% 12.38% 23.48%
Invesco India Tax Plan (G) 18.59% 12.88% 20.86%
Franklin India Taxshield (G) 9.90% 10.05% 18.80%
DSPBR Tax Saver Fund – Reg (G) 8.61% 13.70% 20.31%

Returns from High-Risk Tax-Saving Funds

Scheme Name 1 Year 3 Years 5 Years
Aditya Birla SL Tax Relief ’96 (G) 18.99% 14.01% 22.60%
Tata India Tax Savings Fund – Reg (G) 12.78% 15.30% N/A

Returns from Theme Funds

Scheme Name 1 Year 3 Years 5 Years
Franklin Build India Fund (G) 5.13% 10.42% 24.50%
Franklin India Technology Fund (G) 30.41% 10.90% 18.99%
ICICI Pru US Bluechip Equity Fund (G) 13.74% 8.31% 14.25%
UTI Transportation & Logistics Fund – Reg (G) 15.84% 13.56% 31.75%

Returns from Hybrid Equity-Oriented Funds – Moderate Risk

Scheme Name 1 Year 3 Years 5 Years
Aditya Birla SL Balanced ’95 Fund (G) 8.63% 10.84% 16.81%
ICICI Pru Equity & Debt Fund (G) 9.56% 11.72% 17.86%
HDFC Balanced Fund (G) 10.43% 11.63% 19.18%
L&T India Prudence Fund – Reg (G) 9.75% 11.90% 18.78%

Returns from Hybrid Equity-Oriented Funds – Low Risk

Scheme Name 1 Year 3 Years 5 Years
Kotak Equity Savings Fund (G) 9.10% 8.12% N/A
ICICI Pru Balanced Advantage Fund (G) 9.37% 9.72% 14.39%

Returns from Hybrid Debt-Oriented Funds

Scheme Name 1 Year 3 Years 5 Years
Sundaram Debt Oriented Hybrid Fund (G) 6.03% 8.79% 10.08%
ICICI Pru MIP 25 (G) 7.32% 9.30% 11.36%
UTI Regular Savings Fund – Reg (G) 8.36% 8.90% 10.90%

Returns from Debt Funds – Six Months to One Year Holding

Scheme Name 1 Year 3 Years 5 Years
Tata Treasury Advantage Fund 6.66% 7.72% 8.32%
ICICI Pru Flexible Income Plan (G) 6.70% 8.02% 8.60%
Aditya Birla SL FRF – Long Term Plan (G) 6.71% 8.14% 8.65%
DHFL Pramerica Ultra ST (G) 6.82% 7.80% 8.57%

Returns from Short Term Debt Funds – Low Risk

Scheme Name 1 Year 3 Years 5 Years
Aditya Birla SL Short Term Fund (G) 6.11% 8.02% 8.55%
UTI Banking & PSU Debt Fund – Reg (G) 6.18% 8.50% N/A
HDFC Short Term Opportunities Fund (G) 6.20% 7.77% 8.31%
Axis Banking & PSU Debt Fund (G) 6.85% 7.73% 8.22%

Returns from Short Term Debt Funds – Moderate Risk

Scheme Name 1 Year 3 Years 5 Years
Reliance Medium Term (G) 6.43% 7.82% 8.19%

Returns from Long Term Debt Funds – Moderate Risk

Scheme Name 1 Year 3 Years 5 Years
Aditya Birla SL Dynamic Bond Fund – Reg (G) 2.92% 6.62% 8.06%
UTI Dynamic Bond Fund – Reg (G) 4.10% 8.21% 9.04%
HDFC Medium Term Opportunities Fund (G) 5.92% 8.00% 8.25%

Returns from Long Term Debt Funds – High Risk

Scheme Name 1 Year 3 Years 5 Years
DSPBR Credit Risk Fund – Reg (G) 5.67% 8.19% 8.75%
UTI Credit Risk Fund – Reg (G) 6.06% 8.19% 8.57%
Kotak Medium Term Fund (G) 5.68% 8.36% N/A
Aditya Birla SL Medium Term Fund (G) 6.81% 8.58% 9.44%

GST rate of 18% applicable for all financial services effective July 1, 2017.

News About Mutual Fund Returns

  • SEBI to Allow NRIs Through the FPI Route Provided KYC Norms are Fulfilled

    The Securities and Exchange Board of India (SEBI) has recently announced that it is looking to include non-resident Indians or NRI in the foreign portfolio investors quota, provided a few preconditions are met with. SEBI, a few days ago had written to the Central Government asking for their opinion on including foreigners in the FPI quota. The Central Government in response said that the foreigners will be required to have updated KYC details in order to be included in the quota.

    This measure taken by SEBI can actually result in a surge of inflows from foreign countries to India. This will make NRIs invest more in Indian financial products which was not the case up until you because of the multiple regulations in place. Since NRIs most often take the route of mutual funds, it does not give them a chance to make company oriented investments in multiple companies.

    While India, on average, receives NRI remittances of $10-15 billion every year, the total number of assets owned by foreigners are less than half a billion dollars, every single year.

    The move by SEBI is considered to be groundbreaking in terms of NRI investment in Indian products.

    12 September 2018

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