How to Calculate Mutual Fund Performance and Returns?

As we progress through our career and financial goals, there would come a time when you are required to take informed decisions on financial planning. Each time, you would have to take a call on the evaluation of the investment and how well you are planning it out. Yes, there has to be a diversified approach to your investment, but having a constant watch over the growth is a must.

Mutual funds are a common choice by many to plan out their investment for a long period. Equity based funds almost always beats other investment forms in the market today. To evaluate the performance of your fund, it is important to keep a benchmark. This benchmark will and must always give you an idea of exiting or progressing ahead.   

So, how would you go about this? Here are a few simple methods –

1.       Absolute return: The two most important dates with respect to an investment are – the beginning date and the end of the holding. This is calculated by the dividing the absolute change in the NAV from the investing period and the NAV during the start of the investment. The simplest advantage is that we can use this calculation on any kind of fund to track out the return. (NAV(end) - NAV(start))/NAV(start) would give you the percentage increase.

2.        Total return in fund: Another method to calculate the total return that has come from the fund is to include the dividends that are in place too. This can be calculated by adding the dividends which are spread across the holding period and with the total change to the NAV, divided by the NAV at the initial day. {Dividends +[NAV(end) - NAV(start)]}/NAV(start)

With these calculations, the mutual fund performance can be tracked and you would be able to know when the fund is performing well as per your ‘benchmark’.

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Know the NAV of your Mutual Funds Before you Invest

All of us know that investing in a mutual fund today is a must. There are great investment benefits and you would get certain tax benefits too. One of the key points you must follow when you are investing in them the ‘net asset value’. This number represents the per share market value of the fund you have chosen. In simpler words, it is the price with which investors are bidding to fund shares from the company and also to sell them too.

So, how do you derive this value for a mutual fund? It is quite simple – you have to add the complete total of cash and securities in the fund portfolio (the assets) and remove the liabilities that are present. For example, let’s say a fund has the assets of 3 million and the liabilities of 2 million; then the NAV of the fund would be 1 million.

The computation of mutual fund NAV is calculated at the end of every day and is of great importance to investors. You can also figure out the real time NAV performance based on the traded fund series. In other words, you can easily find out the price per unit of the fund, by dividing the NAV by the number of outstanding units. This would be different from that of a common stock that is in the stock market. While this is based on supply and demand forces, that of the stock market is purely on market sentiment.

Using the NAV of a fund, you can easily understand the present condition of the fund. You can also chart out a series to figure out how the demand for the fund would be. You would not be able gauge the performance of the fund though as it would be independent of the NAV.

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Keeping a Transaction Simple is Easy Now – Using IDFC!

Giving your customer the chance to transact seamlessly should be one of the top most priorities of every company. The customer should have total control on how he is buying and should always have every access to transact through it seamlessly. This is absolutely critical when you are buying mutual funds too – you need to have complete clarity and be able to know how you can transact with it at all times.

One of the simplest advantages with IDFC mutual funds is just that. Here are the many ways you can transact once you have made an investment.

1. Online transactions: With the internet boom, one of the biggest advantages that have come by has been the way we behave online. We want all our information on the internet and that is exactly what you get with IDFC mutual fund investment once you verify PAN number, mobile, bank account number and email address.

2. Mobile: We are all addicted to our mobile phones and it gives us perfect reason to be able to transact through a mobile friendly website. Track and view your statements within a matter of a few taps on your phone. You can also get all information you need via SMS too, it is that simple. These transactions are done with a pre-registration to ensure security at all times.

3. Phone: The good old phone is a great way to have your transactions verified too. Individual investors can track their investments too this way.

The key to having complete control on your investment is by ensuring you are aware of all the transactional insights and that is possible when you use a reliable mutual fund like IDFC. Investing your money into mutual funds is the best investment to make in every stage of your career.

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The Simple Benefits of Investing in Mutual Funds in India

Aren’t we all bogged down about the different investment options that are available for us? One of the first things that come to our mind when we are thinking about making investments is mutual funds. There are many benefits and most of them are way better than investing in any other form.  Well, here are simple financial gains you can get out of investing in them –

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1.       Beat Inflation: Without having to think too much, you can beat inflation and hence get good returns. Instead of having to put your money into the standard saving accounts in your bank, you can make your money grow via mutual funds. While you invest in the savings account of your bank, you get just about 6% interest – that does not beat inflation which is close to 10% on an average. So, mutual funds would always be a smarter investment as compared to a basic bank investment.

2.       The Convenience Factor: As compared to investing in the stock market or even real estate, investing in mutual funds is a lot easier. There is a lot of documentation when you are going to invest in real estate or the stock market – on the other hand, investing in mutual funds in India is really easy. Not too much documentation or details to be shared.

3.       Tax Saving Benefits: the biggest advantage you get by investing in mutual funds is that you get tax exemptions from the government too. That means you are able to save money apart from the growth that comes your way. Completing the limit of your tax exemption is a must of a goal and you can do that easily by investing smartly.

4.       Cost Factor: With all the investment points that are present in the market today, you need to be very choosy about where you put your money. It does require a lot of research, but especially if you are putting larger sums of money. This is the case with real estate especially – the cost of investment is really high. When it comes to mutual funds though, your costs are lower and thus, it is affordable.

5.       It’s a Mixed Basket: It is never advisable to put all your money into a single point of investment. You need to keep your investments as diversified as possible and thus you have a wide array of assets. There are plenty of short, medium and long term options that are virtually tailor made for you.

6.       Accessible Investments: Unlike how you get stuck with many investments – stock market, real estate or even gold, mutual funds can be liquidated any time. There are many schemes that can be used based on the net asset value at any time.

7.       Crystal Clear: One of the best advantages you get with mutual funds is that you always aware of the investment value and growth. Plus, each mutual fund is regulated by SEBI and that guarantees that your money is kept in the right place.

There is no doubt that there are plenty of benefits when you make smart investments. The entire idea is to plan the money you have saved towards mutual funds. Not only would you be saving money, you would be making money.

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Why your credit card could be your biggest saviour!

Life does provide us with quite a few complications and a few of them can be sorted out with the help of money. We have constant challenges in life – a medical emergency, or an unexpected expense and most of the time, we are left wondering how we can make ends meet. Well, if you have been in a situation like this in the past and have been left wondering how you can get the better of it – you need a credit card.

With the power of a credit card, you would be able to get a health credit period of at least 40 days. This leaves you with the strength of spending today and paying tomorrow. It would solve the immediate need for a cash payment and give you the benefit of paying at an extended date.

The cycle of credit is something that you need to look at very carefully when you are choosing a credit card and also the credit payment facilities – most good banks like Indus Ind bank allows you to clear the payment in multiple methods like online transfers and even from ATMs. With a credit cards facility, you would be able to manage your savings in a much better fashion.


You also stand to have joining bonuses and cash back offers among the many offers when you sign up for a credit card. Get discounts at restaurants, cash back when you book movies or flights and even have fuel surcharge waived off. No two ways about it, a credit card can give you some amazing benefits.

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Are you aware of the yield curve in your mutual fund

If you have invested in mutual funds, it is vital to know what the yield curve is and which is applicable for you. The curve is a combination of charts that gives you yield of bonds that are of the same quality but there would be different maturities that are linked up. It would give you the interest rates of the future and it is compared with a simple time vs yields. The curve would give you the rate with which the market are to transact the capital for all time terms. There are different kinds of yield curves.

- Normal yield curve: This condition is matched when there are long term interest rates instead of short terms. The curve in this case would be sloping upwards.

- Flat yield curve: When there is no change in the money market due to interest rates, a flat yield is achieved.

- Steep yield curve: This is quite common during the start of an economic expansion or when a period of recession is complete. The slope of the curve is the difference between the short and the long term yield. This has inputs from inflation and high long term interest rates.

- Inverted yield curve: There would be a downward sloping yield curve when the short term interest rates are higher than the long term interest rates. This is seen when there is high volatility in the market.

It is very important to match your mutual funds yield to the investment you have made and what you can expect from it. 

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How do you redeem a mutual fund scheme & what is a transaction slip?

Most of us invest in mutual funds today and the odd question pertaining redemption of these mutual funds does crop up frequently. The procedure to claim these mutual funds is always not clear and does need a bit of research. If you have purchased the fund from an offline source or an AMC, you would have to go the company office and get the redemption form filled out. This would be available at branches of the insurance company and has to be done offline only.

It is possible to get multiple mutual fund redemptions at once too, so a good idea would be to save multiple trips and make it at one go. It is convenient and easy to fill. Here are the list of information points you need

• -          Name
• -          Folio number (this is to extremely important to get right)
• -          Volume of units
• -          Unites to be redeemed

Once this is submitted to the executive at the office, it would be sent for processing. You would have to submit the bank details for transfer of funds too. You can use the same account that was used at the time of buying for a quicker transaction. The transfer of mutual fund dividend is quite quick to say the least; you can get the amount transferred into your bank within 2-3 working days.

The redemption transaction slip is used to make a redemption claim and is available online too; so make a quick print and fill out your details before you go to claim your dividends.

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What is the difference between Debt fund & hybrid fund?

There are different types of mutual funds that exist in the market today and each of them have different priorities or growth plans and two of the different kinds of funds are debt funds and hybrid funds.

Debt fund

A debt fund is a mutual find that is invested mostly in the safer market like fixed income securities. Examples of these may be bonds and treasury bills, monthly income plans, short term plans, liquid funds and even fixed maturity plans. These are varied across short term, medium term and even long term investment plans and can be scalable across your requirements. These are in most cases planned by individuals who do not want to invest in risky or volatile market. This is a slow but steady return as compared to an investment in the stock market for example.

Hybrid fund

It is a mutual fund investment that is determined by the portfolio that is created with a mixture of stocks. In most cases, this also includes different kinds of bonds too that can varied in a fixed proportion or floating structure. There are mainly domestic or international hybrid categories. These funds respond to market conditions and are passively managed with a fixed life cycle to get into a more aggressive structure.

The biggest difference in both of these equity funds is the location of investment in both cases. A hybrid fund is more balanced as you are investing in both stocks as well as bonds where as in a debt fund, you are restricting your investments to only a fixed income security. It is widely different when it comes to goals and outcomes even though you can see that it is for a different target category when it comes to buyers of both. Based on your requirement, you should settle on either one.

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Planning of making your first investment?

One of the first excitements after you start earning is to make your first investment. You are curious as to the ways you can make the investment and if you have to just start small and choose amongst the many options to take the plunge. Just like any other first time investor, you are bound to come across many ideas from friends, colleagues and well wishers and probably, one of them would be mutual fund investments.

What is mutual fund?

A mutual fund is an investment programme that is promoted or created by shareholders amongst diversified holdings and trading. This is professionally managed and you would have experts looking after your investment, giving you a massive benefit. The mutual fund definition itself means creating a portfolio among different companies so as to get a balanced return.

How to make an investment?

One of the first tips for investment in a mutual fund is to understand the kind of companies that are going to be a part of the portfolio and the period of investment. You can gauge an approximate of the growth thinking about the industry as well as the exit time horizon. You would know how long you would be participating in the mutual fund as a whole too. It is key to understand what the estimates are from the mutual fund investments and how you can get the best results from it.

The main idea would be to keep a close watch on the growth of the fund and since it is one of the first investments to make, you can choose similar funds in the future. It is important to notice that these predictions being made are by experts and that they would consider the past and present market conditions to determine the future growth of the mutual fund.

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How to invest in mutual funds

Rarely does one make a profit out of an investment without research. Before you look at investing your money, you must look at the market conditions and if the investment matches your requirement. There are several factors that contribute to the success of a fund investment and timing and fund selection are the most important of them. Yes, there are different requirement for so different investors, so let’s take a look at what you should know before you invest in mutual funds. 

What is mutual fund in the first place? It is a diversified investment in a set of companies or equities that will give you a return over a period of time, based on the performance of the overall set of companies. You can choose sector specific mutual funds which can be targeted to pharmaceuticals, energy, petro companies and so on. You can also invest based on the market cap of the company. Large cap, medium cap and small cap are the three major kinds. It is based on your take to a volatile investment that you can choose which of the three to choose. These are the mutual fund basics that you have to know before you go ahead making an investment. These are tax saving funds too and would give you a healthy benefit in income tax. To understand which kind of mutual fund definition of market cap would suit you best – speak to your financial advisor or an industry expert. The performance of your investment depends on the market condition and hence you require expert guidance.

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Why You Should Invest in Mutual Funds in 2015?

Mutual Funds are some of the most sought after investment opportunities. They offer good returns and a great sense of security that most other investment opportunities cannot provide for their investors. At the start of the year, mutual funds faced a slump of sorts, but market analysts expect the year to be quite fruitful for those who have made the smart decision of investing their money in mutual funds. However, those who have predicted good returns from the market have also stated that these returns will depend on certain factors that will act as benchmarks for the market through the year. These benchmarks include the pricing of crude oil, which saw a slump last year, and a hike in the rates of the Central Bank.

Mutual Funds

The decrease in the crude oil prices hit the energy sector in a bad way. At the end of 2014, energy mutual funds were seen as the biggest losers, and these doesn’t seem to be any respite in sight for these funds. On the other hand, this slump in prices has been most beneficial for airlines, as airline stocks skyrocketed. Therefore, on the whole, the lowering of crude oil prices has benefitted the market.

After the financial crisis in 2008, the Federal Reserve System set up some aggressive measures in the form of rates being at an all-time low, and repurchasing assets. The central bank completed its 3 rounds of repurchases by October 2014, but they continued to keep their rates low. It is however expected that they will raise the rates during this year, which will have a positive effect on the market, as profit margins are expected to rise.

Based on the market expectation, market analysts have handpicked the T. Rowe Price Health Sciences Fund, the Fidelity Select Transportation Fund, and the T. Rowe Price Global Technology Fund as the three funds to have invested in this year. They feel that these funds are most likely to give you the best returns for your money. Always remember to check all fund documents before you finally decide where to invest your money.

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Why You Should Invest in Balanced Funds

While most people like to save their money for rainy days, that aren’t entirely sure of how to make sure they have enough money when that rainy day rolls around. Most people prefer security and aren’t too thrilled with dealing with unknowns, which is why Fixed Deposits are the most common way Indians like to save their money. However, with inflation going through the roof recently, people have realized that they need a way to make their savings work for them. The safe fixed deposits with their low returns aren’t going to cut it for those people saving for their children’s education and wedding, and their own retirement. The desperate need to save more money than possible has led to the growing popularity of investments in India.

Balanced/Hybrid Mutual Fund

Investments are still a bit of a gamble, and most people lean towards putting their money in Mutual Funds. These funds pool together money from numerous investors and then a market expert invests the money for them. As safety goes, mutual funds are seen as the safest, but coming a close second are balanced funds, also known as equity-oriented hybrid funds. These funds have a very low risk factor and are perfect for first-time investors who aren’t sure what their risk-appetite really is. The funds also invest over 65% of funds in equity, and this gives investor certain tax benefits as well, making it all the more beneficial. People who are looking to invest for the first time, can try putting their money in balanced mutual funds by adopting an SIP route. It is preferable to invest money when the market is at a low, so you can reap higher benefits when the market rises.

Over the past year, equity and debt market funds were found to be volatile, and did not provide very high returns. While balanced funds on the other hand performed better than some mid-cap and large-cap funds in certain cases. While your financial goals will obviously dictate how you invest your money, it is a good idea to fully understand the investment before you make one.

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