Category-wise mutual funds returns
Point-to-point return provides the return of a fund between two specific dates. These could be for any period - 1 month or 1 year or 3 years or 5 years. The returns calculated are historical (for past periods) and not an indicator of future returns. The returns are usually absolute for periods of up to 1 year and annualized for periods more than one year.
Advantages of point-to-point returns
- Point to point returns help understand how a fund has delivered over a specific period.
- It is very simple to calculate point-to-point returns if you have the NAVs of the ‘from’ and ‘to’ dates for which you need the return.
- It makes comparison across mutual funds easier and also helps compare it with other finance products, especially when returns are annualized.
However, point-to-point returns can also mislead at times.
Limitations of point-to-point returns
- Point-to-point returns may not tell what happened between the 2 points in time. For example, the returns between 2015-20 for a fund may have been very high but much of the returns may have come say for the first 3 years and the next 2 years may have seen poor performance.
- It does not tell whether a fund is consistent in its performance through longer periods of time. Rolling returns, on the other hand, help get over this limitation.
- Any volatility in performance or negative return periods cannot be detected by looking at point-to-point returns.
Rolling returns are a more useful way to analyse mutual fund performance than point-to-point returns. We have the individual rolling return averages and related metrics of schemes here. The data below will give a summary of the category-level averages of rolling returns over multiple periods of time. If you are new to mutual funds, please learn more about rolling returns in the explanation given below the data.
This PrimeInvestor tool showing rolling returns for multiple periods across mutual fund categories is available for Prime Subscribers only!
Rolling returns are a more useful way to analyse mutual fund performance than point-to-point returns. This tool gives you different aspects of rolling returns to better your analysis. You will be able to compare a category’s performance against another category in the tool below. This will help you gauge the characteristics of a category and their risk-reward metric compared with a different category. Simply choose the return period and the category which you want to analyse. Understand more about this tool and rolling returns further down. For scheme level data on the same use this tool.
This PrimeInvestor tool showing rolling returns statistics across categories including standard deviation and other statistics is available for Prime Subscribers only!