Reading room · Mutual fund education · Published 2026-11-10

Understanding mutual fund returns

A fund's return can be quoted several ways. Know which one you are looking at.

Confirmed facts

• Absolute return is the total change over a period. CAGR is the steady yearly rate that would give the same total.
• Direct and Regular plans invest in the same portfolio; Regular pays a distributor commission, so its NAV grows more slowly.
• Growth plans keep gains in the fund. IDCW plans pay out part of them.

Historical data

• Returns over one period tell little about the next. A fund that led last year often does not lead the next.

Interpretation

• Compare funds in the same category, over several periods, and look at risk (volatility, drawdown) as well as return.

Sources

• AMFI: Know your fund

Educational content, not advice. Disclaimer