HOW TO CALCULATE THE RETURNS ON MUTUAL FUNDS

In India, mutual funds are one of the most popular investment avenues. They allow people to invest their money in a systematic manner and yield good profits in the long run. Additionally, this investment option is professionally managed, which makes it suitable for beginners as well, giving them enough opportunity for portfolio diversification. 

Table of Content

• Why Calculate Mutual Fund Returns
• Understanding Mutual Fund Returns
• What is a Mutual Fund Investment Calculator?
• Advantages of Using a Mutual Fund Return Calculator
• Tips to Get Better Mutual Fund Returns
• Wrapping It Up

In every mutual fund, investors have to share profits, losses, income and expenses in proportion to the amount they have invested. Every AMC that deals in mutual funds appoints a finance expert as their fund manager who will manage the collected funds by investing in different companies. You can get good returns on your investment if you pick the right mutual fund scheme.

That being said, it is always a good idea to calculate the maturity value of an investment beforehand, no matter if you are investing in a SIP or putting in a lump sum amount. Now the bigger question is: how to calculate the return on mutual funds you are investing in? Well, there are a few mutual fund return calculators available online. If you are going through the SIP route, you can use a SIP return calculator to calculate the mutual fund SIP returns.

Suggested Read: Understanding How Mutual Funds Work: A Complete Guide

Why Calculate Mutual Fund Returns

There are several different benefits of calculating the returns on a mutual fund scheme, such as:

Better Financial Planning: One of the biggest advantages of calculating mutual fund returns is improved financial planning. It allows an individual to understand if his/her investments are on the right track or not. The profits made by a particular scheme should be enough to meet one’s financial goals, such as retirement planning, higher education, house purchase, etc.

Performance Tracking: Regular return calculation helps investors measure the performance of a mutual fund scheme. Sometimes, the portfolio shows a positive value, indicating growth, but a proper calculation gives an overview of the fund's performance against its designated market benchmarks.

Risk Assessment: When you calculate the returns of a mutual fund scheme over various market cycles, you get a clear idea of the amount of risk involved in it. In most cases, a fund generating high returns also comes with greater risk, subjecting the entire portfolio to extreme volatility. By analysing the returns generated over a longer period, you can decide if the mutual fund scheme aligns with your risk appetite or not.

Portfolio Optimisation: If you want to make a good profit from mutual fund investments, it is essential to rebalance your portfolio from time to time. This requires you to identify underperforming assets and reallocate those funds to better-performing assets. Periodic calculation can help you understand mutual funds with the best return for portfolio optimisation.

Understanding Mutual Fund Returns

There are several different types of mutual fund returns:

Absolute Return: If you calculate the investment growth in terms of percentage and it remains unaffected by the investment tenure, the return is called absolute return.

Annualised Return: If the investor receives the return on his/her investment annually, it is called annualized return. This type of mutual fund return considers the effect of the compounded interest rate.

Total Return: The overall profit of a mutual fund over a period of time is known as the total return. It includes interest, dividends, distributions, and capital appreciation.

Trailing Return: When you calculate the returns generated in a particular time window that ends today, it is called trailing return.

Point to Point Return: When you calculate the annual return of a mutual fund scheme between two fixed points in time, it is known as point-to-point return.

Rolling Return: Rolling returns are the annualized returns generated in a fixed time window which may be daily, weekly or monthly until the ending day of the time period.

It can be confusing for an investor to keep all different types of mutual fund returns in mind. This is when a mutual fund investment calculator comes into the picture.

Suggested Read: Top Mutual Funds for High Returns and Low Risk in 2026

What is a Mutual Fund Investment Calculator?

This type of return calculator is an easy-to-use tool that helps you to calculate returns on mutual funds. You can only check the approximate return using these tools since mutual fund investments are subject to market risk. The best option is to use a reliable online tool that calculates all different types of returns on your investment. This way, you will not have to dabble in multiple tools like the index fund return calculator, liquid fund return calculator, or a SIP investment calculator.

For example, if you want to calculate the SIP return rate just select the SIP investment calculator and you will have the expected value of mutual funds SIP returns. Such tools that are used to calculate return on mutual funds help an investor to figure out how much profit he/she can get by investing a particular amount in a mutual fund scheme.

It is very easy to use a mutual fund SIP return calculator to calculate the SIP return rate. A systematic mutual fund SIP calculator uses specific parameters to calculate return on mutual funds. You have to enter details like your SIP amount, investment tenure, and expected SIP return rate. Thereafter, the mutual fund SIP return calculator will be ready with the results within a matter of seconds.

Advantages of Using a Mutual Fund Return Calculator

There are many reasons why you should use a mutual fund or SIP return calculator to calculate returns, such as:

• You get an approximate estimation of the returns you are about to get.
• There is no need to spend a lot of time performing all these calculations manually.
• Using an online SIP return calculator is very convenient as you can do your financial planning on the go.
• Using an online calculator also allows you to compare multiple schemes and understand which mutual fund offers the highest return. These insights are useful in making well-informed investment decisions.

Tips to Get Better Mutual Fund Returns

• Start investing in mutual funds early, as it helps maximise compounding benefits. Over time, even a small investment can result in a good profit.
• To ensure good returns on your investment, staying consistent is important. Avoid skipping or discontinuing your mutual fund contributions.
• Currently, you can find hundreds of mutual fund schemes in the market. It is important that you assess your financial goal and risk tolerance first and then make a decision.
• Review your investment portfolio at least once a year and make any necessary changes on the basis of the fund’s performance.

Wrapping It Up

When you invest your hard-earned money in any scheme, it is always a good idea to figure out how much profit you are going to make out of it. If done manually, calculating the expected return on your investment is a time-consuming task. You can perform these calculations using a reliable online calculator.

At Muthoot Finance, we offer a variety of mutual fund schemes to meet different financial goals. These schemes come with benefits like diversification, liquidity, access to professional fund managers, and a lot more. Visit your nearest Muthoot Finance branch where our experts will help you get started on mutual fund investments.