Investment returns is the change in
value of an investment over a period of time. There are many method
of calculating returns.
What is an absolute return mutual fund? How to calculate ?
Let's understand how investor returns are calculated.
Absolute Returns is the actual profit on your investment. The time that you held not considered. You won it for a day or year, the absolute return is same.
Let us take a example You invest in fund 10000 and later sell for 13000, your absolute return will be 3000 or 30%.
Simple annualized Return The increase in value of an investment, expressed as a percentage per year.
Todays Rs. 10000 investment appreciates over two year to 13000. Absolute return will be 30% . Simple annualized return is 15 %, i.e. 30% divided by 2 years.
Compound Annual Growth Rate (CAGR) smoothed annualized gain of an investment over a given time period .
Let us take a example
If you invest 10000 , after 1 year return is 20% so end of year its become 12000.
also second year you make profit 20% so your money is 12000 + 2400 = 14400
After 2 years your 10000 become a 14400 Net profit 4400
1. Absolute Return is 44 %
2 Simple Return is 22%
3 CAGR is 20%
What is an absolute return mutual fund? How to calculate ?
Let's understand how investor returns are calculated.
Absolute Returns is the actual profit on your investment. The time that you held not considered. You won it for a day or year, the absolute return is same.
Let us take a example You invest in fund 10000 and later sell for 13000, your absolute return will be 3000 or 30%.
Simple annualized Return The increase in value of an investment, expressed as a percentage per year.
Todays Rs. 10000 investment appreciates over two year to 13000. Absolute return will be 30% . Simple annualized return is 15 %, i.e. 30% divided by 2 years.
Compound Annual Growth Rate (CAGR) smoothed annualized gain of an investment over a given time period .
Let us take a example
If you invest 10000 , after 1 year return is 20% so end of year its become 12000.
also second year you make profit 20% so your money is 12000 + 2400 = 14400
After 2 years your 10000 become a 14400 Net profit 4400
1. Absolute Return is 44 %
2 Simple Return is 22%
3 CAGR is 20%
good work
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