How to understand Mutual Fund Performance ?

POSTED BY sudhank31 ON February 5, 2015 8:53 pm COMMENTS (4)

Dear ,

I have read so many articles related to investment in ELSS funds (recommended for tax saving purpose). I started SIP in 5 tax saving funds of Rs 1000 monthly but confused with the analysis of mutual fund performance. Following is just an example :

Scheme Name VRO
Rating
1 YEAR RETURNS 3 YEAR RETURNS 5 YEAR RETURNS ACTION
Kotak Select Focus Fund(G) How to understand Mutual Fund Performance ? 68.29% 30.83% 17.94% Invest Now

In this fund , Can anyone please explain that how they mention 68% return (Was it Peak at any point of time/Average ) in 1 Year & 31% return (lesse return for more period) if we keep our money for 2 years in same fund & 18% (Lesser return for more period) if we keep lock our money for 5 years.

Thanks

Sudhank

4 replies on this article “How to understand Mutual Fund Performance ?”

  1. Hemanth says:

    in the last 1 year, the markets are in peaks and almost every stock is performing well. that’s why the performance of 1 year is good.

    if I understand correctly, you are thinking that if I am investing for more time, I am getting less interest…. this is not correct….. based on the markets, this varies.

    the % that they mentioned is that exactly, one year before if you invest, the returns would be 68.29% and similarly for others….

    1. sudhank31 says:

      Thanks Hemanth !!

      but question still remains the same whether more lock in period giving less return !!

      this fund is just an example but in so many 5 start rating funds are showing similar data …

      then shouldn’t we exit in one year because more lock in period is of no use ??

      1. Hemanth says:

        last one year market is up, so all funds performed…..

        if you think mutual funds will give returns for 1st year, go ahead and invest in equity funds and redeem after one year and enjoy the returns.

      2. J says:

        @sudhank31 , the returns over 1 year are annualized and if 5 year return shows 20%, it means that you would have gotten 20% interest every year. Yearly performance varies with market 🙂

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