Mutual funds rolling returns
Rolling returns of mutual funds are a better way to analyze the past performance of mutual funds than using the
traditional point-to-point returns. You can use the tool below to find the rolling returns of funds both
'Direct' and 'Regular'.
Comparable indices are available only for equity funds. We recommend you use the most appropriate benchmark to make the right comparison. For example, you can use the Nifty 100 index for large-cap equity funds. For flex-cap funds, the Nifty 500 is a good comparison.
The start date in the tool is the date from which your first return point will start (subject to data availability, based on fund’s inception date). You can compare up to 3 funds.
You need to make your own interpretations from this tool. Please avoid making comparisons with our calls in the Review tool or in Prime Funds. For example, if you ask us why a fund has a high average rolling return and still a ‘hold’ in our review tool, we will be unable to take your query. The reason is that our proprietary methodology takes into account a wide variety of metrics, weights them based on their importance in each category, looks at trends, and other qualitative factors before arriving at a rating score and call. Therefore, kindly avoid queries on fund choices based on these tools.
- The normal 1-year, 3-year, 5-year returns that you see in factsheets and websites are point-to-point returns. That is, it shows the change in NAV from one point (date) to one point (date).
- Rolling returns are when you calculate the point-to-point returns at a specific frequency for over a period of time.
- Rolling returns have 3 aspects to it: the return period (such as 1 month, 1 year, 3 years etc), the frequency at which you are calculating this return (every day, every week, every month etc), and the length of time for which you want to see the return (such as for 3 years, 10 years etc)
- Take an example. Return period – 1 year. Frequency – daily. Length of time – 3 years. Here’s what this means: you are looking at the 1-year returns every day for a period of 3 years. In other words, you’re rolling the 1-year return every day for 3 years.
- Take the same example above with dates, to make it clearer. Say you’re carrying out this exercise on 25.4.2021. The current 1-year return would be that as on 25.4.2021 – so you are seeing the return from 25.4.2020 to 25.4.2021. Then you roll it by one day. So, you see the return from 24.4.2020 to 24.4.201. You roll again by one day – from 23.4.2020 to 23.4.2021. You do this until you cover 3 years of rolled returns. This makes the final date for which you have the 1-year return 25.4.2018. This way, you have the 1-year return every day from 25.4.2018 to 25.4.2021 (1 year return rolled every day for 3 years).
- The 1-year/3-year/5-year return (which you normally see) aren’t useful to understand a fund’s performance. These returns show the change in NAV on a single day in one year compared to a single day in another. It does not tell you what happened in between those two dates. Markets and/or the fund could be up or down in between those dates.
- Point-to-point returns are influenced by what happened on the start date or end date. If markets were down at the start date, returns would look strong on the end date and vice versa.
- When a fund’s 1-year/ 3-year/ 5-year returns look better (or worse) than others, it doesn’t tell you if the fund has always been better or whether it’s just the current point-to-point returns.
- Since rolling returns look at returns over a period of time, they are better able to capture trends in performance and average out the swings in returns.
- The average returns is the average of all return points for the return period you have chosen. For example – if you chose rolling 1-year returns, then the ‘average’ is the average of all such 1-year returns for the rolling period you chose. The higher the average, the better the performance.
- The minimum and maximum returns are the minimum and maximum values for the return period you have chosen. It can tell you the worst performance of a fund (how much it has fallen) and the best performance and help gauge whether a fund is more defensive (less falls) or aggressive (high maximum returns).
- Standard deviation is the deviation of each return point from the average returns of the fund. This measures how much the fund return swings from its mean (both on the upside and downside). Higher the standard deviation, higher the volatility.
- The returns distribution tells you the proportion of times a fund delivered returns within the given range. For example – let’s say a fund shows a figure of 40% under the head ‘returns more than 20%’. This means that the fund delivered 20% returns 4 out of 10 times, in the period you chose. This data will give you an idea on whether your own return expectations is in tune with how the fund has returned in the past and the probability of achieving it based on past returns. However, do note that as markets and economy mature, you may have to tone down your return expectations. For example – the past 5- or 10-year returns may not be your guideposts for returns over 30 years.
- The rolling returns data cannot be extrapolated as our recommendation or a call to buy/hold/sell funds. It cannot be estimates of future returns either.
- This tool is meant to help you gather useful data that is otherwise difficult to access and allow you to do your own analysis.
- The rolling returns data is the base to calculate a number of metrics including Sharpe, standard deviation, capture ratios and so on.