Why is 1 year return higher than 3 years?
Why 1-year returns for some funds are higher than its 3 or 5-year returns? Mutual funds return on an investment is reported on an annualized basis. And mutual fund returns fluctuate across years. This is the reason why 1-year returns may appear higher than 3 years returns.
1) You found the one year returns higher as the markets did well in the last one year and so did the fund!. In this case the fund gave 35% return in one year. 2) Any mutual funds research website shows return upto one year in absolute terms. That means if the return is 6% in 6 months, then it is absolute 6%.
There is always a short term volatility and long term stability. Factors affecting good returns is more in the short timeframe than the longer timeframe. Because in 3 years we may have been in a bull or a bear market which will determine the returns.
Annual return is defined as the percentage change in an investment over a one-year period. Annualized return is the percentage change in an investment measured over periods shorter or longer than one year but stated as a yearly rate of return.
Most investors would view an average annual rate of return of 10% or more as a good ROI for long-term investments in the stock market.
As time goes on, the number increasingly drops, and according to the data, only about 10% of actively managed funds have outperformed the S&P 500 over the past 15 years.
Factors to Consider Before Choosing Mutual Funds to Invest for 3-4 Years. Mutual funds are an ideal way to invest in the market. It is easy, convenient, and cost-effective. They provide a great way to diversify your investments and take advantage of the market's growth.
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.
| Category | Top Performer | 1 yr |
|---|---|---|
| Corporate Bond | L&T Triple Ace Bond -Direct (G) | 11.20 |
| Childrens | HDFC RSF - Equity Plan - DP (G) | 70.80 |
| Conservative Hybrid | ABSL Regular Savings Fund (G) | 28.40 |
| Contra | SBI Contra Fund - Direct (G) | 90.70 |
- Opt for High-Risk Options. Your risk appetite is a crucial factor that determines your returns. ...
- Assess Your Financial Goal When Making Investments. ...
- Opt for Sector Funds that are Expected to Grow. ...
- Invest in Index Funds. ...
- Diversify Your Portfolio. ...
- SIP Calculator. ...
- Lump Sum Calculator.
What is the average return on a mutual fund?
| Average Mutual Fund Returns | ||
|---|---|---|
| Category | 2021 Return | 15-Year |
| U.S. Large-Cap Stock | 26.07% | 9.73% |
| U.S. Mid-Cap Stock | 23.40% | 8.73% |
| U.S. Small-Cap Stock | 24.19% | 8.50% |
- Invest in Stocks for the Long-Term. ...
- Invest in Stocks for the Short-Term. ...
- Real Estate. ...
- Investing in Fine Art. ...
- Starting Your Own Business (Or Investing in Small Ones) ...
- Investing in Wine. ...
- Peer-to-Peer Lending. ...
- Invest in REITs.
Exit Loads on Various Types of Mutual Funds
However, one can ignore the expense by adjusting the investment tenure with the time period for which the fund charges an exit load. Same with equity funds. It varies but is usually around 1% if redeemed within the first 12 months. However, it differs from AMC to AMC.
| Fund Name | 3-year Return (%)* | 5-year Return (%)* |
|---|---|---|
| Quant Absolute Fund Direct-Growth | 29.18% | 18.74% |
| Kotak Multi Asset Allocator FoF - Dynamic Direct-Growth | 20.14% | 15.82% |
| ICICI Prudential Equity & Debt Fund Direct-Growth | 21.33% | 14.27% |
| ICICI Prudential Multi Asset Fund Direct-Growth | 21.78% | 13.85% |
Long-term capital gains are realised when you sell units of a debt fund after a holding period of three years. These gains are taxed at a flat rate of 20% after indexation. Also, you are levied with applicable cess and surcharge on tax.
The S&P 500 index is a basket of 500 large US stocks, weighted by market cap, and is the most widely followed index representing the US stock market. S&P 500 3 Year Return is at 26.39%, compared to 18.84% last month and 66.99% last year. This is higher than the long term average of 22.66%.
To calculate the annualized portfolio return, divide the final value by the initial value, then raise that number by 1/n, where "n" is the number of years you held the investments. Then, subtract 1 and multiply by 100.
If someone uses YTD for a calendar year reference, they mean the period of time between Jan. 1 of the current year and the current date. If they use YTD for a fiscal year reference, they mean the period of time between the first day of the fiscal year in question and the current date.
Calculating Multi-Year Returns
As an example, if you made $10,000, $15,000 and $15,000 in three consecutive years, adding those figures produces a total return of $40,000. Dividing this total by your original investment and multiplying by 100 converts the figure into a percentage.
