How to Calculate Return on a Mutual Fund

A mutual fund's net asset value changes daily and affects your return.

A mutual fund is a type of investment vehicle that uses investors' money to buy various investments, such as stocks or bonds. You can purchase shares of a mutual fund, similar to purchasing a share of stock in a company. A mutual fund share represents a partial ownership in the fund's investments. The price of a single share of a mutual fund is called its net asset value (NAV) per share, which changes daily. You can calculate your return on a mutual fund to determine the percentage you've earned based on the dividend and capital gains distributions you received and the change in NAV per share.

Instructions

1. Determine a mutual fund's NAV per share at the beginning and end of the period for which you want to calculate a return and the number of shares you own. For example, a mutual fund might have a $20 NAV per share at the beginning of the year and a $25 NAV per share at the end of the year, and you may have owned 50 shares during the entire year.

2. Multiply both the beginning and ending NAV per share by the number of shares you own to calculate the beginning and ending value of your investment. Using the current example, you would multiply $20 by 50 to get a beginning value of $1,000, and multiply $25 by 50 to get an ending value of $1,250.

3. Multiply the per share distribution of dividends and capital gains you received during the period by the number of shares you own to calculate your total distribution. In the example, if you received $1 per share in distributions during the year, multiply $1 by 50 shares to get $50 in total distributions.

4. Subtract your beginning investment value from your ending investment value, then add your total distributions to the result. In the example, subtract $1,000 from $1,250 to get $250. Then add $250 to $50 in distributions to get $300.

5. Divide your result by the beginning value of your investment, and multiply this by 100 to calculate your percentage return on your mutual fund. In the example, divide $300 by $1,000 to get 0.3, then multiply 0.3 by 100 to calculate a 30 percent return on your mutual fund.

Tips & Warnings

• This example excludes the effect of taxes and fees, which may reduce your actual return on a mutual fund.

References

• U.S. Securities and Exchange Commission: Invest Wisely: An Introduction to Mutual Funds
• Marketocracy; How is Performance Measured; March 2002
• Bakersfield College: Financial Planning Problems