[ad_1]
Returns in mutual funds may be described in two other ways: absolute and annualised. As an investor, you ought to be accustomed to the 2.
Absolute returns measure the general progress within the funding over a particular time frame. For instance, in case your funding has grown from Rs 1 lakh to Rs 1.5 lakh over a span of two years, absolutely the return is 50 per cent. The funding has grown by 50 per cent over two years.
Then again, annualised return is exactly the annual charge at which the funding has grown over a particular interval. For this, we normally take Compounded Annual Progress Charge (CAGR), in order that the impression of compounding can also be thought of.
Persevering with the above instance, the annualised return of the identical funding can be 22.47 per cent. This signifies that the funding has grown at an annual charge of twenty-two.47 per cent over the span of two years.
Prompt learn: What do the assorted sorts of fund returns imply?
[ad_2]
Source link
