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What are rolling returns?

What are rolling returns?
To bet on a mutual fund based on the fund performance is a tough task as the determination of the suitable performance period for the fund is really hard. It is wherein rolling returns of the fund come in play and helps in determining the returns garnered by the specific fund over a term.

Rolling returns are the annualized returns computed for a specified term on an average basis for each of the day, week, month as well as the last day of the period. So, for any term say you want to assess the returns provided by a particular fund from April 1, 2013 to April 1, 2014, you can taken into account return provided on each of the day of the term by computing returns from April 1, 2013 to April 1, 2014, March 31, 2013 to March 31, 2014 and so on.

The reference to all such returns shall give you a better picture of the fund performance and you would be better off in knowing how much the fund might have earned you, had you invested any time in the last year.

Rationale for considering rolling returns in mutual fund selection

Besides giving you information on daily, weekly, monthly returns from the fund for the chosen term, the parameter also suggest the degree of volatility in the fund and whether the fund can offer sustainable and consistent returns over a time period. Volatility in the rolling returns is a caution for the potential investor in the fund. In the other case, when an investor tries to adjudge the fund on the basis of point-to-point returns taking a particular period into consideration, the performance of the fund may not be correctly known. And rolling returns on the other hand, which determine performance for each of the day of the period indicate the performance of the fund in the back of external factors as well as market environment. For a larger view, a comparison of the rolling returns of the fund and rolling returns of the benchmark index of the fund can be made.

GoodReturns.in

Story first published: Saturday, February 22, 2014, 14:05 [IST]
Read more about: mutual funds return

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