Mutual Fund performance calculations

A mutual fund’s performance is calculated by change in its net asset value (NAV). It would help compare performance of different schemes.

Let’s consider a simple example and explore it to cover performance calculations of basic schemes. Example: A mutual fund scheme issued Rs 10 face value units to an investor at a NAV of Rs 20 on 1st Jan 2007 and the NAV at the end of Dec 07 is Rs 25. The performance of the fund for this period is calculated by the below formula.

Performance of the fund = (Current NAV – NAV at the time of Investment) * 100 / NAV at the time of Investment
Performance of the fund = (30 – 25)* 100/25 = 20%

This is the simplest case. Usually the funds also issue dividends. Let’s say the fund issued a dividend of 30% of face value. So the dividend amount per unit is Rs 3. Say the NAV at the time of dividend distribution is Rs 27.

If we consider the dividend and recalculate its performance it would be
Performance of the fund = ((Current NAV – NAV at the time of Investment) + Dividend Amount) * 100 / NAV at the time of Investment
Performance of the fund = ((30 – 25)+ 3)* 100/25 = 32%

The dividend received can be reinvested by the unit holder or by the fund if it’s a dividend reinvest/growth scheme which should also be taken into account.

Considering dividend reinvest option the unit holder gets 3/27 = 0.11 units. So the current NAV would be 1.11 * 30 = 33.33
So the revised performance figure considering this into account =  ((33.33 – 25)+ 3)* 100/25 = 45.32%

Please visit the below link to have a look at performances of different mutual fund schemes.

Mutual fund schemes performance

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Sathish Emmadi

Sathish Emmadi is a co-founder & editor at Lastbull.com. He is presently working in IT for one of the world’s top mutual fund companies. Handled multiple projects in BFSI (Banking,Financial Services and Insurance) domain. An Engineering Graduate from NITW.

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2. Mutual Fund Options – Dividend Reinvest
3. Mutual Fund Options – Growth option
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