CAGR – It calculates the annualized returns on investment. It is suitable to be used when one time lumpsum investment and one time redemption is done in a mutual fund scheme. For example – An investor invests ₹ 1 lakh in a mutual fund scheme and redeems ₹ 2 lakhs at the end of 5 years. The CAGR in this case is 14.87%. There are several apps and websites wherein investor can enter the invested amount, redemption amount and duration of investment to calculate CAGR. If you go by the mathematical formula, compound interest formula can be used as below:
A = P (1 + r / n)nt
A = Current Market Value of Investment, P = Initial invested amount, r = rate of interest, n = number of times interest is compounded per year (the value is 1 for annualized return) and t = number of years of investment.
If we know other values, ‘r’ can be calculated. ‘r’ denotes CAGR or compound interest.
XIRR – Mutual fund investments are usually not done with one time investment and one time redemption. Investors usually have several periodic and non periodic investments through SIP and multiple lumpsum investments, and investor could have several redemptions as well. The annualized return for each investment and redemption done is different in this case. XIRR, or Extended Internal Rate of Return is one of the best parameter to calculate returns for investment in this case as it calculates the annualized returns of each investment, and combines them to have a single XIRR value. This is the best parameter for analyzing the performance of investment done.
Rolling Returns: While comparing the performance of mutual funds, if we look into the XIRR returns of 2 different funds in a 5 year period, the difference might be 7 percent on one particular day, and could be 1 percent a week later. So, XIRR may not give a clear picture for selection of mutual fund based on returns. In this case, rolling returns would be the right parameter for mutual fund selection. Let’s say we are comparing the rolling returns of 2 different funds, Fund A and Fund B for a 3 year period with starting date from 1st of January 2018 until 1st of January, 2024 (6 years duration).
The returns are calculated for each 3 year duration in this case and then averaged out. The returns are calculated from 01.01.2018 to 01.01.2021, then from 02.01.2018 to 02.01.2021 and so on until 01.01.2021 to 01.01.2024, and then averaged out. The same can be displayed in a chart comparing the performance of 2 funds.
This gives a proper understanding of how the funds have performed over years for each duration. This is the best parameter for comparison and selection of mutual fund schemes to invest, based on returns. One of the best website for comparison of rolling returns is advisorkhoj.com, which allows comparison of upto 4 mutual fund schemes at one go.
So, to conclude:
- CAGR is the parameter to calculate annualized return in case of one time investment and one time redemption.
- XIRR is the parameter to calculate annualized return in case of several investments and one time or several redemptions.
- Rolling return is the parameter that needs to be used for comparing mutual fund returns to opt the right one for investment.
Interesting explanation of how to calculate and compare mutual fund returns using CAGR. I appreciate the detailed breakdown of the formula and the method of averaging returns over different periods. It’s helpful to see how rolling returns can provide a clearer picture of a fund’s performance over time. The mention of advisorkhoj.com is useful for those looking to compare multiple funds efficiently. However, I wonder if there are other factors, like risk or expense ratios, that should also be considered alongside returns when selecting a fund. What’s your take on balancing returns with other metrics? Would love to hear your thoughts!
Hello, Thanks for your comments. As per my understanding, the following factors needs to be considered:
1) Track record of fund manager.
2) AUM of the fund – low to moderate in the category.
3) Expense ratio – low to moderate in the category.
4) Track record of the fund. If the fund has not been in existence for long time, investor should at least consider fund manager by a fund manager who has performed very well in other funds he or she managed.
You can find detailed explanation of these points in other blogs on the website.
This explanation provides a clear breakdown of how to calculate and compare mutual fund returns using CAGR. The methodology of averaging returns over rolling three-year periods seems like a practical approach to assess long-term performance. However, I’m curious how outliers or market anomalies during specific periods are addressed in this model. The recommendation of advisorkhoj.com is helpful, but have you considered how accurate their data is compared to other financial platforms? I also wonder if this method accounts for factors like fund management changes or economic shifts. Overall, it’s a solid framework for comparison, but I’d like to dig deeper into the limitations of this approach. Do you think this method works equally well for all types of mutual funds, or are there exceptions?
Hello, Thanks for your comments. You can use advisorkhoj.com, mfonline.co.in, rupeevest.com, etc. The data of all these websites are same as far as rolling returns comparison are considered.
As per my understanding, this method works well but additionally, the following factors needs to be considered before investing:
1) Track record of fund manager.
2) AUM of the fund – low to moderate in the category.
3) Expense ratio – low to moderate in the category.
4) Track record of the fund. If the fund has not been in existence for long time, investor should at least consider fund with fund manager who has performed very well in other funds he or she managed.
You can find detailed explanation of these points in other blogs on the website.
The explanation of CAGR and rolling returns is quite clear and helpful for understanding mutual fund performance. I appreciate the detailed breakdown of how the returns are calculated over different time periods. The mention of advisorkhoj.com as a tool for comparison is useful, but I wonder if there are other platforms that offer similar or better features. Do you think rolling returns are the most reliable metric for comparing mutual funds, or are there other factors to consider? It would be interesting to know how often these calculations are updated to reflect the latest market trends. Overall, this seems like a solid approach for making informed investment decisions. What’s your take on the accuracy of these calculations in volatile markets?
Hello, Thanks for your comments. You can use advisorkhoj.com, mfonline.co.in, rupeevest.com, etc. The data of all these websites are same as far as rolling returns comparison are considered.
As per my understanding, this method works well but additionally, the following factors needs to be considered before investing:
1) Track record of fund manager.
2) AUM of the fund – low to moderate in the category.
3) Expense ratio – low to moderate in the category.
4) Track record of the fund. If the fund has not been in existence for long time, investor should at least consider fund with fund manager who has performed very well in other funds he or she managed.
You can find detailed explanation of these points in other blogs on the website
This explanation of CAGR and rolling returns is quite insightful. It’s interesting how the calculation averages out returns over multiple three-year periods to provide a clearer picture of performance. I wonder if this method accounts for market volatility or external economic factors during those periods. The mention of advisorkhoj.com is helpful, but I’m curious if there are other reliable platforms for such comparisons. Do you think this method is foolproof for selecting mutual funds, or are there other factors to consider? Overall, it seems like a solid approach, but I’d love to hear more about its limitations. What’s your take on this?
Hello, Thanks for your comments. You can use advisorkhoj.com, mfonline.co.in, rupeevest.com, etc. The data of all these websites are same as far as rolling returns comparison are considered.
As per my understanding, this method works well but additionally, the following factors needs to be considered before investing:
1) Track record of fund manager.
2) AUM of the fund – low to moderate in the category.
3) Expense ratio – low to moderate in the category.
4) Track record of the fund. If the fund has not been in existence for long time, investor should at least consider fund with fund manager who has performed very well in other funds he or she managed.
You can find detailed explanation of these points in other blogs on the website.
Interesting explanation of how to calculate CAGR and its importance in comparing mutual fund performance. I appreciate the detailed breakdown of the formula and the method for averaging returns over different periods. The mention of advisorkhoj.com is helpful for those looking to compare funds. However, I wonder if there are other factors besides CAGR that should be considered when selecting a mutual fund, such as risk or expense ratios. Do you think CAGR alone is sufficient for making investment decisions? Also, how reliable is the data provided by advisorkhoj.com? Would love to hear your thoughts on this!
Hello, Thanks for your comments. You can use advisorkhoj.com, mfonline.co.in, rupeevest.com, etc. The data of all these websites are same as far as rolling returns comparison are considered.
As per my understanding, this method works well but additionally, the following factors needs to be considered before investing:
1) Track record of fund manager.
2) AUM of the fund – low to moderate in the category.
3) Expense ratio – low to moderate in the category.
4) Track record of the fund. If the fund has not been in existence for long time, investor should at least consider fund with fund manager who has performed very well in other funds he or she managed.
You can find detailed explanation of these points in other blogs on the website
This explanation provides a clear breakdown of how to calculate and compare mutual fund returns using CAGR. The methodology of averaging returns over rolling three-year periods seems like a practical approach to assess long-term performance. However, I’m curious how outliers or market anomalies during specific periods are addressed in this model. It’s great to see tools like advisorkhoj.com being recommended for comparing multiple funds efficiently. Still, I feel returns shouldn’t be the only factor in decision-making. What about the risk associated with the funds? How do you balance high returns with potential volatility? Also, do you think expense ratios play a significant role in the long-term performance of a fund? Would love to hear more about how you weigh these factors when making investment decisions.
Hello, Thanks for your comments. You can use advisorkhoj.com, mfonline.co.in, rupeevest.com, etc. The data of all these websites are same as far as rolling returns comparison are considered.
As per my understanding, this method works well but additionally, the following factors needs to be considered before investing:
1) Track record of fund manager.
2) AUM of the fund – low to moderate in the category.
3) Expense ratio – low to moderate in the category.
4) Track record of the fund. If the fund has not been in existence for long time, investor should at least consider fund with fund manager who has performed very well in other funds he or she managed.
You can find detailed explanation of these points in other blogs on the website
Interesting explanation of how to calculate and compare mutual fund returns using CAGR. The detailed breakdown of the formula and the method of averaging returns over different periods is quite insightful. Rolling returns indeed provide a clearer picture of a fund’s performance over time, which is crucial for making informed investment decisions. The mention of advisorkhoj.com is helpful for comparing multiple funds efficiently. However, I wonder if there are other factors, like risk or expense ratios, that should also be considered alongside returns when selecting a fund. How do you think outliers or market anomalies during specific periods are addressed in this model? Would love to hear your thoughts on balancing returns with other metrics!
Hello, Thanks for your comments. You can use advisorkhoj.com, mfonline.co.in, rupeevest.com, etc. The data of all these websites are same as far as rolling returns comparison are considered.
As per my understanding, this method works well but additionally, the following factors needs to be considered before investing:
1) Track record of fund manager.
2) AUM of the fund – low to moderate in the category.
3) Expense ratio – low to moderate in the category.
4) Track record of the fund. If the fund has not been in existence for long time, investor should at least consider fund with fund manager who has performed very well in other funds he or she managed.
You can find detailed explanation of these points in other blogs on the website
Interesting explanation of how to calculate and compare mutual fund returns using CAGR. I appreciate the detailed breakdown of the formula and the method of averaging returns over different periods. It’s helpful to see how rolling returns can provide a clearer picture of a fund’s performance over time. The mention of advisorkhoj.com is useful for those looking to compare multiple funds efficiently. However, I wonder if there are other factors, like risk or expense ratios, that should also be considered alongside returns when selecting a fund. What’s your take on balancing returns with other metrics? Would love to hear your thoughts!
This explanation provides a clear breakdown of how to calculate and compare mutual fund returns using CAGR. The methodology of averaging returns over rolling three-year periods seems like a practical approach to assess long-term performance. However, I’m curious how outliers or market anomalies during specific periods are addressed in this model. Do you think this method could potentially skew the results in certain cases? Also, how reliable is the data from advisorkhoj.com compared to other platforms? Would you recommend any additional tools or resources for a more comprehensive analysis?
Hello, Thanks for your comments. You can use advisorkhoj.com, mfonline.co.in, rupeevest.com, etc. The data of all these websites are same as far as rolling returns comparison are considered.
As per my understanding, this method works well but additionally, the following factors needs to be considered before investing:
1) Track record of fund manager.
2) AUM of the fund – low to moderate in the category.
3) Expense ratio – low to moderate in the category.
4) Track record of the fund. If the fund has not been in existence for long time, investor should at least consider fund with fund manager who has performed very well in other funds he or she managed.
You can find detailed explanation of these points in other blogs on the website.
Interesting explanation of how to calculate and compare mutual fund returns using CAGR. It’s clear and detailed, but I’m wondering how this method accounts for sudden market crashes or booms that can skew the averages. Do you think this approach might over or underestimate the true performance? Also, the mention of advisorkhoj.com is helpful, but are there any other platforms you’d recommend for such comparisons? I’m curious why the focus is solely on returns and not on factors like risk tolerance or expense ratios. Wouldn’t those play a significant role in decision-making? How do you balance these metrics when selecting a fund? Would love to hear your perspective!
Hello, Thanks for your comments. You can use advisorkhoj.com, mfonline.co.in, rupeevest.com, etc. The data of all these websites are same as far as rolling returns comparison are considered.
As per my understanding, this method works well but additionally, the following factors needs to be considered before investing:
1) Track record of fund manager.
2) AUM of the fund – low to moderate in the category.
3) Expense ratio – low to moderate in the category.
4) Track record of the fund. If the fund has not been in existence for long time, investor should at least consider fund with fund manager who has performed very well in other funds he or she managed.
You can find detailed explanation of these points in other blogs on the website.