Wednesday, January 23, 2013

Prajna Capital

Prajna Capital


Understand the Mutual Funds returns formula

Posted: 23 Jan 2013 05:51 AM PST

The aim of any investment is to earn returns. It is necessary, then, to understand how to read these.

The simplest is the average annual return, the arithmetic mean of the returns earned over a period. It is prone to be the most misused indicator, to show unrealistic returns. Let us say you invest `100,000 in a mutual fund (MF).

At the end of the first year, the growth is 100 per cent and at the end of second year, a fall of 50 per cent. At the end of two years, you have not gained anything. But, the average annual return method will show net return of 25 per cent.

When the gain or loss in a portfolio is expressed as a percentage of the invested capital, it is known as the absolute return. is calculated as the difference of current value and cost value, divided by cost value, which is 64.14 per cent. But, this does not take into account that this return has been earned over more than a year.

If the holding is for over a year, we usually look at the compounded annual growth rate (CAGR). This gives you the year-on-year returns. The formula is ((F/S)^(1/n))1. F = Final value, S = Initial value and n= holding period. In the table, CAGR is 22.65 per cent. It is assumed the gains are reinvested every year. So, the investment grew to `122,646 in first year, 150,422 in second year and `164,136 at the end. But this might not be true.

The fund may have fallen drastically in one year and given excellent returns the next year. CAGR smoothens the returns and does not considering volatility over the holding period. But, it does make returns comparable across funds.

In case of a series of cash flows for which the rate of return is to be calculated, XIRR is used. This considers the timing of inflow and gives a better picture than CAGR. It is useful in calculating the rate of return for investments like SIPs.

XIRR is 25.25 per cent. Here, most investors would calculate the return as 13.33 per cent. That's incorrect as the method does not take into account different timings of each cash flow. Again, it is assumed the cash is reinvested at the same rate. But, the rates fluctuate and may not be available when reinvesting.

Quoting returns delivered over less than a year as annual return uses simple annualised returns. It is not misleading. It is used in calculating returns in less volatile investments like debt funds. It will not work for equity funds. Simple annualised return= returnsX (365/no. of days). This is not a real return, but can be used for comparison across funds, as the actual return in a year may be different than what is quoted.
 
All MF returns are historic data. Past performance may not be sustained. All these return calculations then become essentially tools to compare the plethora of funds in the market. These will also be used to compare the performance against the benchmark. A fund manager's job in an actively managed fund is to surpass the benchmark. Comparing the returns to the benchmark will tell if the investment objective is met.
 

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

 

---------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver Mutual  Funds  Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Reliance Gold Fund

Posted: 23 Jan 2013 03:55 AM PST

Tax Saving Mutual Funds Online

Invest Mutual Funds Online

Call 0 94 8300 8300 (India) 

 

 

Reliance Gold Fund review is going to cover the merits and demerits of the fund. But before we proceed for that, we need to understand why we need that. So, as we know that stock markets are extremely volatile at the moment and investors are never sure about the future trend of it. International economic situation has been dismal and it seems that only news which can come is 'Bad News. So lot of people has started moving towards Gold. Gold has been rising consistently in the last few months and it has made all-time highs in this period. There are lots of options available in the market to invest in Gold. Exchange traded funds have been one of the most popular mean to do that. But lately, one new tool has emerged and it has been grabbing the eye balls quite well.

Reliance Gold fund is one of that new tool. It is open ended, fund of fund scheme. It generates returns which are able to match with ETFs. It was launched in February 2011 and since its launch, it has been able to create enough attention around.

Reliance Gold Fund offer a easy and affordable mean of investing in Gold. An investor is not required to have a demat account to invest in this fund. This is going to help those millions of investors who want to invest in gold but cannot go for Exchange traded funds because that requires demat account.

Systematic Investment plans are available with this product. Long term capital gain tax after 1 year will be applicable on this. This fund is carrying a load of 2 per cent and it is applicable if you exit before 1 year. Reliance Gold fund have delivered a return of 25.7 per cent for six month period.

Reliance Gold fund has done well in terms of increasing interest among investor and as it doesn't require demat account, it is help not only reliance to take this fund forward but also to those investors who are looking for a better and safe alternative to invest in Gold 

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

 

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

 

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

 

These Application Forms can be used for buying regular mutual funds also

 

Some of the Top performing Mutual Funds are

  1. ICICI Prudential Dynamic Plan  Invest Online
  2. HDFC Top 200 Fund   Invest Online
  3. DSP BlackRock Top 100 Fund   Invest Online
  4. Reliance Equity Opportunities Fund  Invest Online
  5. Birla Sun Life Front Line Equity Fund
  6. Sundaram Select Midcap   Invest Online
  7. IDFC Premier Equity Fund
  8. SBI Magnum Contra Fund   Invest Online
  9. UTI Dividend Yield Fund

---------------------------------------------

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

 

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver Mutual  Funds  Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Kotak Mutual Fund dividend

Posted: 23 Jan 2013 03:36 AM PST

Buy Gold Mutual Funds

Invest Mutual Funds Online

Download Tax Saving Mutual Fund Application Forms

Call 0 94 8300 8300 (India)

 

Kotak MF offers dividend

Kotak Mutual Fund has announced the entire appreciation in net asset value as dividend under the dividend option of Kotak quarterly interval plan series 5.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

1.ICICI Prudential Tax PlanInvest Online

2.HDFC TaxSaver Invest Online

3.DSP BlackRock Tax Saver Fund Invest Online

4.Reliance Tax Saver (ELSS) Fund Invest Online

5.Birla Sun Life Tax Relief '96 Invest Online

6.IDFC Tax Advantage (ELSS) Fund Invest Online

7.SBI Magnum Tax Gain Scheme 1993 Invest Online

8.Sundaram Tax Saver Invest Online

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver Mutual Funds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

No comments:

Post a Comment