Category Archive : Mutual Funds

Mutual Fund Returns

Types of Mutual Fund Returns – Trailing, Calendar, Rolling & SIP

Ways To Measure The Mutual Fund Performance?


There is a lot of confusion in investors over which Returns are more appropriate to evaluate the returns earned by the mutual fund investment. In this article we have discussed the appropriate types of mutual fund returns and how they are used.

Performance of Mutual Funds :Types of Mutual Fund Returns

The returns on any investment is measured as the total of its capital appreciation over time and any other income generated divided by the initial amount of investment. This simple calculation is termed as Total Returns. We have reviewed our funds returns through 4 different parameters, namely:

  1. Trailing Returns
  2. Calendar Returns
  3. Rolling Returns
  4. SIP Returns
Types of Mutual Fund Returns
Types of Mutual Fund Returns

1.Trailing Returns

  • Trailing returns are the most popular measure to assess performance of your Fund in the past. They are point-to-point returns. Trailing returns look backwards from a specific date for a funds annualized returns over a specific period of time.
  • Trailing Returns are defined in 2 categories : 1.Regular and 2.Direct
  • These returns are calculated for 1/3/5/10 years for Regular category and 1/3/5 years for Direct category. The backward point from which Trailing returns are calculated is usually from the latest NAV available.
  • For Example, returns are calculated from a specific date of the most recent year say 31-Jan-2019 to any past date say 31-Jan-2018 (1 year trailing return), 31-Jan-2016 (3 year), 31-Jan-2014 (5 year), 31-Jan-2009 (10 year) etc.
Trailing Returns

Above graph shows the Trailing Returns for Aditya Birla SunLife Frontline Equity fund as compared to the Benchmark and Large cap funds Category. It shows if the fund has overperformed or underperformed when compared to its benchmark and category.

2.Calendar Returns

  • Calendar Returns are nothing but absolute returns. E.g. 1st January to 31st December of each Calendar year. Calendar returns tells us how a fund performs in Market Rises and Market falls in various years. It shows if the fund is able to contain the losses better than the Index it follows and how good returns a fund can generate in the market rallies.
  • Calendar Returns are calculated for last 10 years starting from 2008. NAV as on last working day of the year is considered for calculating the returns.
  • Returns are calculated from last working day of Dec month of the immediately preceding year to the last working day of Dec month of the year under consideration.
  • For Example, period to calculate returns for 2017 is 30-Dec-2016 to 29-Dec-2017
Calendar Year Returns
Calendar Year Returns

Above graph shows the Calendar Returns for Aditya Birla SunLife Frontline Equity fund as compared to the Benchmark and Large cap funds Category. It shows if the fund has overperformed or underperformed when compared to its benchmark and category.

3.Rolling Returns

  • Rolling returns give a picture of how a fund’s returns have improved constantly and not just over the latest month or quarter-end. Thus, Rolling Return of a fund is the indicator of the consistency in the performance improvement of that fund. So, rolling return is considered to be a more reliable parameter in the mutual fund performance analysis.
  • It shows that you made equivalent return of an average amount in a year in last X years period. In this return all the extreme highs and lows are included from a period of last X years showing you the minimum and maximum returns that you may earn.
  • Rolling returns is a type of annualized return. Rolling returns calculate CAGR in an overlapping fashion. i.e. the average annualized returns are taken for a period on every day/week/month and are taken till the last day of the period.
Calculation of Rolling Return
  • Let us say we have to calculate 3 year rolling return for the period from 2008 to 2018. Then, we will start calculating performance from 1st Jan 2008 to 1st Jan 2011. Next analysis will be from 2nd Jan 2008 to 2nd Jan 2011 and so on till the latest data. This is how daily rolling returns are calculated for 3 years time period.
  • Similarly, 5 year rolling return will be calculated from 1st Jan 2008 till 1st Jan 2013. The total period in consideration for required data for Yadnya’s analysis is 10 years (2008-2018). In our analysis, we use monthly rolling returns (not daily rolling returns)
Rolling Return Calcualtion
Rolling Return Calcualtion
  • The Probability is calculated using mean and standard deviation. Standard deviation is a measure of how much returns can deviate from the average return.
  • In our analysis for rolling return calculation we rolled on monthly basis for last 3/5/7 years. We are comparing rolling return of fund with its rolling standard deviation. And this standard deviation is computed from monthly return and then annualized.
  • Here we can take an example of a fund’s rolling return comparison in last 3/5/7 years.
Rolling Returns
Rolling Returns
  • For Example, We can recognize that in ABSL Frontline Equity Fund gave lowest return of 11.5% and highest return was 20.8% in 7 years Rolling returns. And the probable low return is 12.4% and probable high return is 16.2%.Rolling return performance of the fund is consistently above category average in all observation periods – 3, 5 & 7 for both lowest & highest returns.
  1. Mean – standard deviation = probable low return
  2. Mean + standard deviation = probable highest return
  • Our rolling return analysis also shows that how in shorter duration ( 3 years), you may incur low or negative returns depending on time period but as the duration of rolling return increases (5/7 years), likelihood of low returns also reduces significantly.
  • In above example, lowest return of the Large cap category average is -0.6% in 3 years whereas it is 9.0% in 5 years which shows the whole category has never given less than 9.0% return if the investor has invested for 5 or more years.

4.SIP Returns

  • Systematic Investment Plan is a mode of regular investments in mutual funds. SIP allows you to invest a certain pre-determined amount at a regular interval (weekly, monthly, quarterly, etc).
  • A SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future.
  • You are allocated certain number of units based on the ongoing market rate (called NAV or net asset value) for the day. Every time you invest money, additional units of the scheme are purchased at the market rate and added to your account. Hence, units are bought at different rates and investors benefit from Rupee-Cost Averaging and the Power of Compounding.
Process of SIP Calculation- How to Calculate SIP Returns?

For the detailed process of SIP Calculation, Refer our article: What is Systematic Investment Plan [SIP]?

Example : SIP Performance of Aditya Birla Sun Life Frontline Equity Fund

SIP returns of the Aditya Birla Sun Life Frontline Equity fund is below average and benchmark in 1 & 3 years and near average in long term.


What Is Dividend for Mutual Fund?

Mutual Fund Dividend Explained with Example


In this article, we will discuss what is dividend for Mutual Fund. The mutual fund houses profit includes both dividends received from companies and profit which they earn from improving markets. Mutual Fund hounses distribute this profit to their unit holders.

Meaning of Dividend for Mutual FUnds

  • Meaning of dividend is different in stocks and Mutual Funds.
  • In stocks, dividend is a portion of company’s earnings which is paid to shareholders whereas in Mutual Funds, dividend is the gains of the fund scheme which is distributed to the investor.
  • Mutual Fund dividend doesn’t just mean the stock dividend they have got from their investment, it can also be given from capital gain which they have earned on their investments.
  • Frequency of paying dividend depends upon fund, it may be anytime during the year. They are no set frequency; Equity funds may not give any dividend in a year or give multiple times.
What is Dividend for Mutual Fund?
What Is Dividend for Mutual Fund?

Types of Options in Mutual FUnds

Mostly large cap companies are more mature, so they tend to distribute their profit as dividend. But in case of small cap companies, they need to invest most of their profit in their growth that’s why their dividend is uncertain.

There are two type of option is available in mutual fund scheme for investor; –

A. Growth option – In this option investor will not received any dividend from fund. Dividend amount that received by fund from companies in which they invested, is reinvest in his portfolio. This reinvestment money directly increases the NAV (Net Asset Value) of growth option we don’t get regular income but whenever we sale our investment it realize higher return than compare to dividend option.

B. Dividend Option – In this option investor receives dividend from mutual fund. There are two type of option available.

i. Dividend Option – Under this option, the Mutual Fund Company declares Dividend and directly credits that dividend to the bank account of the Unit holder.

ii. Dividend Reinvestment option – Under this option, Dividend declared by the Mutual Fund Company is not credited to Bank Account, but it is reinvested in the respective Mutual Fund Scheme itself. Simply speaking, Fund houses purchase Additional Units from the amount of dividend received.

Example : Dividend Option of Mutual FUnd

For the analysis we are taking dividend option. We calculate dividends distributed by the fund as a % of NAV. And For calculation of dividend as a % of NAV we use the NAV as on the record date. Dividend distributed of fund is compare with its category average from inception of fund.

In this example, we have compared dividends distributed by Aditya Birla Sun Life Frontline Equity Fund with dividends distributed by Large Cap Category Average from its inception year. For detailed analysis of fund, Refer :

Top 10 fund houses

What Is Asset Under Management (AUM) of Mutual Fund?

AUM definition with example


In Mutual Funds, many investors sharing a common investment objective pool in their money. The sole intention of their investment is earning returns. This pooled money is known as the Asset under Management of the scheme. In this article we will discuss more about AUM.

AUM of the Indian Mutual Fund Industry has grown from ₹ 4.17 trillion (31st Mar, 2009) to ₹23.80 trillion (31st Mar, 2019). The growth is more than 5 ½ times in a span of 10 years.

What is Asset Under Management (AUM)?

  • Asset Under Management (AUM) is ‘the total market value of Assets or Capital that a Mutual Fund holds on behalf of its investors’.
  • It is an indicator of the size and success of the Fund House. Net assets of any scheme gives fair idea of confidence level of investors in the mutual fund scheme.
  • AUM generally rises when the fund has consistently delivered positive returns as they attract new investments. Likewise, if the fund starts hitting reds it can reduce the assets. Whenever an investor invests new funds or redeems his investments it has an effect on assets of the fund.
  • High Asset Under Management (AUM) is an indicator of investors confidence on the fund manager and the fund house. If the fund has had a glorious past it is more than enough to attract more investors to it.

AUM wise Top 10 Fund Houses

AUM Wise Top 10 Fund Houses
AUM Wise Top 10 Fund Houses


Lets observe the trend of ABSL Frontline Equity scheme’s AUM as compared to the average AUM of Large Cap Category. And also its AUM growth with the AUM growth of category whether positive or negative in the industry.

AUM of ABSL Frontline Equity Fund and Large Cap Funds Category Average
AUM of ABSL Frontline Equity Fund and Large Cap Funds Category Average
  1. Above graph shows the rise in AUM of Aditya Birla Sun Life Frontline Equity Fund as compared to the Large Cap funds category average on the Primary Axis (Left axis)
  2. The graph also shows the % growth at which the AUM has changed since Jan-08 when compared with % growth in AUM of Large Cap funds category on Secondary Axis (Right axis).
  3. ABSL Frontline Equity Fund is the largest Large Cap fund in the category. It has shown decent growth in AUM until in recent months the growth has been little lower than category average. For more detailed analysis of Aditya Birla Sun Life Frontline Equity Fund, Refer :
  4. Overall, a High AUM with good growths shows investor’s trust in fund’s management and performance 

AUM BASED TER (Total Expense ratio) by SEBI

  • Every fund house charge their investors through Expense Ratio. It is a management fee levied by fund house which is proportional to the fund size.
  • Generally it is observed that most funds who have higher AUM charge a lower Expense Ratio. Thereby increasing profits in the hands of investor. There are a few exceptions for this like ICICI
  • Note- In its press release dated 12th Sept 2018, SEBI has defined updated Total Expense Ratio slabs based on total AUM of fund houses. These slabs are as below:
Updated Total Expense Ratio Slabs by SEBI based on Total AUM of Fund Houses

Updated Total Expense Ratio Slabs by SEBI based on Total AUM of Fund Houses
Types of Expense Ratio

What Is An Expense Ratio? (Direct vs Regular)

Explanation on Mutual Funds Expense Ratio


Expense Ratio states how much you pay a fund in percentage terms every year to manage your money. It is an efficiency ratio that measures the management expenses as a of percentage total funds invested in a mutual fund.

Expense Ratio : Meaning

  • Mutual Funds can be costly to create, manage and maintain. A profesional fund manager must actively manage the invested assets and research new investments. Thus, the fund manager must ensure that the fund is investing in accordance with its goals.
  • To manage your money, a mutual fund house/AMC incurs some expenses such as fund management fee, administrative fees, registrar fees, auditor fees, advertising expenses and other asset-based costs incurred by the fund. To manage these expenses, fund house charges a fee for their services which is called Expense Ratio.
  • Expense ratio does not include Portfolio transaction fees or brokerage costs, as well as initial or deferred sales charges.
  • Potential and current investors use expense ratio to see how efficiently the fund is being managed. A higher ratio indicates that more expenses are incurred to manage a set amount of assets. A lower ratio indicates that less are expenses are needed to measure the same amount of assets. In other words, management is doing a more efficient job at operating the fund.
Expense Ratio
Expense Ratio


Lets see how to calculate the Expense Ratio –

  • We can calculate by dividing the fund’s operating expenses by the average value of the fund’s assets.
  • Expense Ratio = [ Operating Expenses ÷ Average Value of Fund Assets ]
  • As se can see in the above equation, only the operating expenses are used. Loads and sales commissions are not included. Because these costs are related to running the fund on a daily basis.
  • Front-end load and Back-end load are the one time costs that are incurred only when an investor invests in the fund or sells his/her assets in the fund.

Types of Expense ratio

  1. There are two types of plan available for investors in mutual fund- Direct plan and Regular plan. Thus, there are two types of expense ratio with respect to these plans- regular and direct.
  2. In Regular plan we invest with help of intermediary like distributor, advisor, broker etc. They provide us recommendation for investment, track our portfolio from time to time and for this they charge fees from us.
  3. In Direct plan investor use his own experience and intelligence without any outsider help for managing his portfolio. That’s why he doesn’t need to pay any extra money.
  4. Thus, in Regular Plan, Expense ratio is higher as compare to Direct Plan.
Example :
  • We have seen that, Why in Regular Plan Expense ratio is higher as compare to Direct Plan? Here you can understand this with help of below graphs. Aditya Birla Sun Life Frontline Equity Fund’s direct expense ratio is between 0.8 to 1.6 but regular expense ratio is between 1.8 to 2.2 in last 5 years. For the detailed analysis of – ABSL Frontline Equity Fund, Refer –
  • Normally we compare specific months yearly for last 5 years. But if in case for that specific month data is not available, then we used nearby month data for our comparison.
Expense Ratio of ABSL Frontline Equity Fund - Direct Plan & Regular Plan
Expense Ratio of ABSL Frontline Equity Fund – Direct Plan & Regular Plan


SEBI has stipulated a maximum limit on these Expense ratios. Equity funds can charge maximum upto 2.5%, debt funds can charge max upto 2.25% & index funds can charge max upto 1.5% of average weekly net assets. Always remember, irrespective of whether a fund generates positive or negative returns expenses are always incurred.

SEBI recommendation

New AMFI Guidelines for Investors Data

AMFI’s Recommendations 20 March, 2019


New AMFI (Association of Mutual Funds In India) Guidelines for Investors Data state a Standard Process for Capturing/Updating Investors’ Email Address & Mobile No. against their folios maintained by AMCs/ RTAs.

SEBI in its letter dated July 9, 2018 regarding the inspection of mutual funds, addressed to AMFI following points –

  1. Invalid Email IDs of RTAs ( Registrar or Transfer Agents) in place of investors’ IDs deprives the investors of information which is required to be shard with them.
  2. It has also resulted into violation of confidentionality of information pertaining to the investors.

As per AMFI’s Code of Conduct, mutual fund distributors must ensure that the investor’s address and contact deatils filled in mutual fund application form are investor’s own details and not of any third party. Mutual fund distributors should prevent from filling information of their own or of their employees as the investor’s contact details in the application form, even if it is requested by the investor to do so.

AMFI Guidelines

AMFI's Best Practice Guidelines
AMFI’s Best Practice Guidelines

In accordance with the background mentioned above, AMFI’s Operations & Compliance Committee has recommended a Standard Process for Capturing/Updating Investors’ Email Address & Mobile No. against their folios in the Unit Holder’ Register (UHR) maintained by AMCs/ RTAs.

Accordingly, all AMCs are requested to take note of the following guidelines and take the necessary steps to implement the same.

AMFI Guidelines with respect to New Customers

  1. In respect of New Customers (Investors who do not have any folio with the MF), the email address and mobile no. as provided in the application form or the transaction feed file reveived from Srock exchange/Channel Partners/Registered Investment Advisors shall be captured.
  2. In case where the email ID and mobile no are not provided in the application form or not available in the transaction feed file. The same details of sole/first applicant should be taken as per the KYC data.
  3. If contact details are not available in the KYC data also, then a letter should be sent to the customer alongwith a KYC change request form with the request to provide the same to the AMCs, duly completed.
  4. AMCs/RTAs should make continous follow up effort to collect email IDs and mobile numbers of the sole/first holder via KYC Change Request Form, by sending periodic reminders.
  5. As a general rule, the email address of one investor should not be allowed/updated against folios of other/multiple investors unless the investors in such folios belong to the same family(Family means self, spouse, dependent children, dependent parents)


  1. In respect of existing customers (who already have a folio with MF), AMCs are advised to carry out a thorough exercise of identifying the folios wherein-
  • Email ID is invalid or has not been provided at all or
  • Emai ID of the RTA has been filled or
  • Same Email ID and/or mobile no has been provided against folios of multiple investors who don’t belong to the same ‘family'( as is apperant from name and address) or
  • Email ID and/or mobile no related to distributor through whom the investment was made

2. In case where the email ID and mobile no are not provided in the application form or not available in the transaction feed file. The same details of sole/first applicant should be taken as per the KYC data.

3. In all such cases, where AMCs at the first face find that the email ID / mobile no provided in the application form/ transaction feed file is not of actual investor or incorrect or doubtful, AMCs should take following actions-

  • Arrange to delete the existing email ID / mobile number
  • Check & fill the email ID / mobile number of the primary holder from the KYC data
  • Send a suitable intimation to the concerned investor and distributor about the actions taken as above
  • Request the investor and the distributor to provide investors’ own mobile no and email ID through KYC Request Form if such details are not available in the KYC data
  • AMCs/RTAs should make continous follow up effort to collect email IDs and mobile numbers of the sole/first holder via KYC Change Request Form, by sending periodic reminders.


All communication via email/SMS should necessarily be sent to the email ID/ mobile number of the sole/primary holder.

Implementation Timelines

AMCs are advised to implement the above-mentioned guidelines and processes at the earliest, but latest by June 1, 2019.

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