Mutual Fund Returns - Check Types & List of Estimated Returns (2024)

FAQs

What type of returns do mutual funds have? ›

Income earned from dividends on stocks or interest on bonds. Capital gains or profits incurred when the fund sells investments that have increased in price.

Whether the investment is a lump sum or an SIP route, the returns can be easily calculated using a mutual fund calculator. A mutual fund calculator gives results based on the investment amount, interest rate, and tenure of the investment. It tells you how much you are going to make even before you invest the money.

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%.

Moreover, mutual funds are meant to be evaluated against a benchmark such as a broad index or other yardstick of value - so if the S&P 500 falls 3% in a year and a large-cap mutual fund only falls 2.5%, it can be considered a "good" return, relatively speaking.

Can I withdraw money from mutual funds anytime? Yes, you can withdraw money from most mutual funds anytime, unless they have a lock-in period.

For example, If you invest Rs 10,000 per month for 5 years at 12%, you will receive Rs 8.11 lakh on maturity.

Considering 8% returns, an investment of Rs 50,000 can fetch you Rs 2,33,051 in 20 years. Not suitable for long-term wealth creation or investors with a high-risk appetite.

• A good return on investment is generally considered to be around 7% per year, based on the average historic return of the S&P 500 index, adjusted for inflation. • The average return of the U.S. stock market is around 10% per year, adjusted for inflation, dating back to the late 1920s.

For any time during the year you bought or sold shares in a mutual fund, you must report the transaction on your tax return and pay tax on any gains and dividends.

How many types of return are there in a mutual fund? ›

Investors usually get mutual fund returns as dividends or capital gains. All funds need to give out their collected dividends at least once a year. Only investors who have opted for dividend plan will get dividend subject to availability of distributable surplus.

This includes any interest, dividends, or capital gains the fund has generated along with the change in its market value during a given period. In most cases, total returns are given for one, five, and 10-year periods, as well as from the day the fund opened or inception date.

Despite all the ups and downs that come with equity investing, all major Equity Mutual Funds have delivered double-digit average annual returns in the long run. This level of returns can help you beat inflation easily and hence avoid erosion in your money's purchasing power.

Real rate of return is the annual rate of return taken into consideration after taxes and inflation. However, a rate of return that does not consist of taxes or inflation is referred to as a nominal rate. Likewise, a rate of return that includes taxes or inflation in its calculation is the real rate.

For the top 20 funds, the average 10-year annualized return was 20.83%. For comparison, the S&P 500's annualized return for the same decade was about 12.39% . For the full list of the top 20 mutual funds of 2013 to 2023, scroll through the cardshow below. (All data is from Morningstar Direct, and is current as of Oct.

For ETFs and mutual funds, total return includes both the price change of the shares and the assumption that all dividend and capital gain distributions are reinvested. For stocks, it is assumed that dividend payments are reinvested on the ex-dividend date.