Why 3 years return in mutual funds is higher than 5 year returns? (2024)

FAQs

Why is 3-year return more than 5 year return? ›

True, over the above 5-year period, the rate of return may have been slower compared with the 3-year growth. This could be because the initial 2 of the 5 years may have been lacklustre. But it could be the reverse too.

Returns 3Y: These are the annualised returns you would have gotten if you had invested in this fund 3 years ago. We update it on daily basis based on the latest NAV. Risk: It is calculated using Standard Deviation (variation of returns from its mean).

The recent performance surge has lifted the category scorecard of healthcare funds, with an average return of 59% over a one-year period, a compounded annual growth rate (CAGR) of 18% over a three-year period, and 23% CAGR over a five-year period. This is as per the latest data from Value Research.

The average annual return for the S&P 500, when adjusted for inflation, over the past five, 10 and 20 years is usually somewhere between 7.0% and 10.5%. This means that if your portfolio is returning better than 10.5%, you have a good ROI.

Most mutual funds are aimed at long-term investors and seek relatively smooth, consistent growth with less volatility than the market as a whole. Historically, mutual funds tend to underperform compared to the market average during bull markets, but they outperform the market average during bear markets.

-If there is a change in the fund manager and the track record of the new fund manager is not promising. -If the Asset Management Company (AMC) is facing uncertainty – either looking at exiting the mutual fund business or too many changes in management.

SIPs generate more returns if you invest in them for a longer duration. If you have short-term financial goals, you can opt for the SIP mutual funds that offer the investment option for 3 years. You can gain your desired financial goal without having to wait longer.

A good return on investment is generally considered to be around 7% per year, based on the average historic return of the S&P 500 index, adjusted for inflation. The average return of the U.S. stock market is around 10% per year, adjusted for inflation, dating back to the late 1920s.

Turning to mid-cap funds, Quant Mid Cap Fund emerges as the top performer with a direct three-year return of 32.99%, trailed by Motilal Oswal Midcap Fund at 27.69%, Mahindra Manulife Mid Cap Fund at 26.77%, PGIM India Midcap Opportunities Fund at 26.61%, and Edelweiss Mid Cap Fund at 26.35%.

(You must convert the rate of return to the monthly figure through dividing by 12). You also have n = 10 years or 120 months. FV = Rs 1,84,170. So, the future value of a SIP investment of Rs 1,000 per month for 10 years at an estimated rate of return of 8% is Rs 1,84,170.

Which mutual fund has the highest 5 year return? ›

The definition of long-term varies based on individual goals. Most investors consider a period of 3-5 years or more as a long term. Long-term investments help secure funds for the future. Also, one can start small and build a sizeable corpus because a long-term investment gives enough time for assets to appreciate.

How the Rule of 72 Works. For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72/10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double (1.10^7.3 = 2).

While quite a few personal finance pundits have suggested that a stock investor can expect a 12% annual return, when you incorporate the impact of volatility and inflation, 7% is a more accurate historical estimate for an aggressive investor (someone primarily invested in stocks), and 5% would be more appropriate for ...

A thirty percent return is an achievable feat for one year if you're aggressive enough (and shall I say lucky enough), AND have the stomach to ride out the volatility, but consistently performing year after year becomes an incredible challenge that no one to my knowledge has done.

To calculate the average return for the investment over this five-year period, the five annual returns are added together and then divided by 5.

A 5-year annualized return, also known as 5-year CAGR (Compound Annual Growth Rate), is the average annual growth rate of an investment over a 5-year period, considering the effects of compounding.

The annual return is the compound average rate of return for an investment per year over a period of time. It can be useful when you want to gauge performance over time. An annualized rate of return calculates the average of returns on an investment into a 12-month period.