What are mutual fund returns?
When you invest in a mutual fund, your rate of return on investment are a consequence
of two sources. Firstly, the increase in the value of scheme shares and secondly,
the distributions of the fund which include the dividend distributed by the companies
in which are held in the scheme’s portfolio. A combined total of both these sources
gives your total returns on investment from the scheme. The increase in value of
shares over a period of time and the benefit of this appreciation can only be taken
when you sell some units of the scheme in the market. While, fund distributions
could be transferred to your account on an annual basis as dividend pay-out.
Analyzing the total returns will give you an idea of the potential performance and
generally top mutual funds offer steady and best returns over a long period of time.
However, good past performance does not guarantee superior returns in the future.
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