Absolute Return of a mutual fund refers to the amount of total change in the value of a mutual fund investment at the time of redemption. For example, Mr. A invests Rs. 1 lakh in a mutual fund scheme in January 2016. The value of the mutual fund invests stands at Rs. 1.3 lakh in January, 2019. Thus, the absolute return earned by Mr. A on his investment over a period of 3 years can be calculated as follows:
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Absolute Return = ( Final Investment Value – Initial Investment Amount) * 100 / Initial Investment Amount
Absolute Return on Mr. A’s investment over 3 years
= (130000 – 100000) * 100 / 100000
An absolute return is always expressed in the form of a percentage (%).
Annualised Return refers to the return earned on a mutual fund investment on a yearly basis. It assumes that the investment has grown at a constant rate. Let’s better understand annualised return by calculating the annualised return of the above quoted example.
Annualised Return = (Final Investment Value ÷ Initial Investment Amount)^ (1/number of years) – 1
Annualised Return on Mr. A’s investment = [(130000/100000)^(1/3) – 1] = 9.04%
Thus, Mr. A’s investment grew at an annualised rate of 9.04% every year for 3 years.
How Does a Mutual Fund Return Value Calculator Work?
One should make use of a mutual fund calculator to calculate the final return value on the basis of expected rate of return. Paisabazaar’s Mutual Fund Calculator is an easy to use tool for predicting returns on investment.
An investor needs to put in the principal investment amount and the expected rate of return, to know the final maturity amount payable at maturity. Conversely, investors can also put in the expected maturity amount to predict the rate of returns on their investment.
What is Compounded Annual Growth Rate (CAGR)?
CAGR tells us about the growth of a particular investment over a specific time period. It takes into account the interest earned on principal investment as well as the interest earned on accrued interest.
It becomes important to use the CAGR for analysing investment returns as it incorporates the time value of money. Compared to absolute returns, CAGR presents a better picture of how good a particular investment scheme is. It averages down the volatile returns over the investment horizon.
However, when the investment stretches over a span of time with installments at irregular intervals, it becomes difficult to calculate CAGR. Instead, Extended Internal Rate of Return is used to predict returns on investment via SIP.
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How to Calculate Returns on SIP of Mutual Funds?
Systematic Investment Plan (SIP) involves regular investment of small amounts of money in mutual fund scheme at predefined interval. If one pays monthly installment, and redeems it on a particular day, returns for each SIP investment will vary as the holding period of each SIP varies.
When you invest via SIP, you essentially buy units of the mutual fund scheme based on its Net Asset Value on that particular day of the month. When you redeem your investment, you get the amount equivalent to the number of units you hold multiplied by the NAV of the mutual fund on the day of redemption.
To calculate mutual fund returns for SIP mode of investment, we use XIRR (Extended Rate of Return) to predict the overall rate of return on the invested amount.
XIRR refers to aggregation of multiple CAGRs on each SIP Investment. For this, it is best to use SIP calculator rather than individually checking CAGR for each investment you make via SIP.
It is also helpful when there are irregular cash flows via Systematic Investment Plan (SIP) and Systematic Withdrawal Plan (SWP). It incorporates the complexity of all the investments and withdrawals and gives a consolidated return value.
For instance, consider the following investment where an investor makes an investment of ₹ 2,000 at regular intervals for 5 months. The total principal amount comes out to be ₹10,000. however , at the end of 5 months, she gets an amount equal to ₹11,000.
|Date of SIP||Amount deposited|
|March 1, 2019||₹2,000|
|April 1, 2019||₹2,000|
|May 1, 2019||₹2,000|
|June 1, 2019||₹2,000|
|July 1, 2019||₹2,000|
|Final return amount redeemed||₹11,000|
Extended Internal Rate of Return for the above investment = 45.27% per annum
Here is a List of Mutual Fund Schemes to Invest in FY 2020:
|Fund Name||Fund Assets (Cr)||1 Year Return||3 Year Return||5 Year Return|
|Axis Bluechip Fund – Direct Plan||8749||22%||21%||11%|
|Mirae Asset Tax Saver Fund – Direct Plan||2671||18%||20%||–|
|Axis Midcap Fund – Direct Plan||3551||18%||19%||12%|
|Axis Bluechip Fund – Growth||8749||21%||19%||10%|
|Axis Long Term Equity Fund – Direct Plan||21492||18%||18%||12%|
|Invesco India Growth Opportunities Fund – Direct Plan||1991||14%||18%||12%|
|Axis Midcap Fund – Growth||3551||16%||18%||10%|
|Mirae Asset Tax Saver Fund – Regular Plan||2671||16%||18%||–|
|Mirae Asset Emerging Bluechip Fund – Growth||8868||16%||17%||16%|
|Kotak India EQ Contra Fund – Direct Plan||874||14%||17%||11%|
|Canara Robeco Bluechip Equity Fund – Direct Plan||257||18%||17%||10%|
|HDFC Index Sensex – Direct Plan Growth||399.64||18%||17%||9%|
|Nippon India Index Fund Sensex Plan – Direct Growth||22.55||18%||17%||8%|
|Mirae Asset Large Cap Fund – Direct Growth||13064.85||16%||17%||13%|
|Tata Index Sensex Direct Plan||12.11||18%||17%||9%|
|Axis Small Cap Fund – Direct Plan||1200||23%||16%||13%|
|IIFL Focused Equity Fund – Direct Plan||446||29%||16%||12%|
|JM Multicap Fund – Direct Plan||143||19%||16%||11%|
|Axis Long Term Equity Fund – Growth||21492||17%||16%||11%|
|JM Tax Gain Fund – Direct Plan||35||16%||16%||11%|
|Invesco India Growth Opportunities Fund – Growth||1991||13%||16%||10%|
|Canara Robeco Bluechip Equity Fund – Regular Plan||257||16%||16%||9%|
|Canara Robeco Equity Diversified – Direct Plan||1581||14%||16%||9%|
|Canara Robeco Equity Diversified – Regular Plan||1581||13%||16%||8%|
|DSP Equity Fund – Direct Plan||2888||20%||15%||10%|
|JM Tax Gain Fund – Growth||35||16%||15%||10%|
|Kotak India EQ Contra Fund – Growth||874||12%||15%||9%|
|Mirae Asset Hybrid Equity Fund – Direct Growth||2037.71||15%||15%||NA|
|Tata Retirement Savings Fund Moderate Plan – Direct Growth||1100.88||13%||15%||13%|
|Mirae Asset Emerging Bluechip Fund||8,219||18.27%||14.40%||17.53%|
|Axis Small Cap Fund – Growth||1200||21%||14%||12%|
|IIFL Focused Equity Fund – Growth||446||27%||14%||11%|
|DSP Equity Fund – Regular Plan||2888||19%||14%||9%|
|Aditya Birla Sun Life Tax Relief 96 – Direct Growth||8912.66||9%||14%||12%|
|Invesco India Mid Cap Fund – Direct Plan||621||6%||13%||11%|
|Invesco India Infrastructure Fund – Direct Plan||41||12%||13%||7%|
|L&T India Large Cap Fund – Direct Growth||493.11||16%||13%||8%|
|DSP Equity & Bond Fund – Direct Growth||6360.93||17%||12%||11%|
|SBI Small Cap Fund||2,704||8.33%||11.28%||17.04%|
|Canara Robeco Emerging Equities Fund||5,235||10.38%||11.25%||13.89%|
|Tata Mid Cap Growth Fund – Regular Plan||747||10%||11%||9%|
|Invesco India Infrastructure Fund – Growth||41||10%||11%||6%|
|LIC MF Infrastructure Fund – Direct Plan||55||15%||11%||5%|
|HDFC Index Sensex Fund – Growth||399.64||-2%||11%||8%|
|ICICI Prudential Equity & Debt Fund||23,487||8.11%||10.41%||10.65%|
|ICICI Prudential Balanced Advantage Fund||27,956||12.79%||10.40%||10.37%|
|LIC MF Infrastructure Fund – Growth||55||13%||10%||4%|
|HDFC Hybrid Equity Fund||21,087||9.44%||9.50%||10.22%|
|PGIM India Dynamic Bond Fund||42||13.69%||9.32%||10.08%|
|SBI Magnum Medium Duration Fund||1,942||11.77%||9.31%||9.80%|
|Kotak Asset Allocator Fund||42||11.09%||9.29%||9.12%|
|Franklin India Dynamic Accrual Fund||4,012||9.51%||9%||9.98%|
|DSP Natural Resources and New Energy Fund – Direct Plan||380||0%||9%||11%|
|Kotak Emerging Equity Scheme||4,960||11.35%||8.38%||12.89%|
|ICICI Prudential All Seasons Bond Fund||2,816||11.28%||8.24%||9.91%|
|Aditya Birla Sun Life Balanced Advantage Fund||2,689||9.99%||8.20%||9.46%|
|Nippon India Small Cap Fund (earlier Reliance Small Cap Fund)||8,425||-2.60%||8.14%||11.82%|
|DSP Natural Resources and New Energy Fund – Regular Plan||380||-1%||8%||11%|
|Motilal Oswal Multicap 35 Fund – Regular Growth||13634.94||-10%||8%||15%|
|ICICI Prudential Bluechip Fund – Growth||22182.14||-6%||8%||9%|
|Tata Retirement Savings Fund Moderate Plan – Regular Growth||1100.88||-8%||8%||12%|
|Axis Strategic Bond Fund||1,188||8.32%||7.68%||9.11%|
|SBI Magnum MultiCap Fund – Growth||7582.94||-5%||7%||12%|
|L&T Tax Advantage Fund – Growth||3420.69||-13%||7%||9%|
|Aditya Birla Sun Life Tax Relief 96 – Growth||8912.66||-13%||7%||11%|
|L&T India Value Fund – Growth||8404.03||-13%||6%||11%|
|DSP Equity Opportunities Fund – Growth||5720.56||-8%||6%||10%|
|SBI Bluechip Fund – Growth||22754.43||-6%||5%||10%|