What is the Mutual Fund Return?
Two numbers describe a fund's performance. Absolute return is the total percentage gain regardless of time. CAGR (annualised return) converts it into a per-year rate, which is the only fair way to compare a 3-year fund against a 10-year one, or a fund against an FD.
The third number that matters is what survives tax. From FY 2024-25, listed equity funds are taxed at 12.5% LTCG above ₹1.25 lakh of gains per year; debt funds are taxed at your slab rate.
Formula & worked example
Absolute is simple; annualised needs the n-th root:
CAGR = ((Value / Invested)1/n − 1) × 100
Worked example: ₹5,00,000 grown to ₹9,50,000 over 6 years. Absolute return is 90%, which sounds spectacular — annualised it is 11.29%. After 12.5% LTCG on the ₹4.5 lakh gain (₹56,250), the post-tax CAGR falls to about 10.1%.
How to use this mutual fund return calculator
- Enter the total invested and the current or redemption value.
- Use the actual holding period; for a SIP use roughly half the SIP duration.
- Set the tax rate — 12.5% for equity LTCG, 20% for equity STCG, your slab for debt.
- Judge the fund on post-tax CAGR against its benchmark, not on the absolute figure.
Smart tips
- Never compare a 3-year absolute return with a 10-year one. Always annualise first.
- Equity LTCG has a ₹1.25 lakh annual exemption — harvesting gains up to that limit each year is legal and free.
- Expense ratio comes out of NAV, so the return you see is already net of it. A 1% difference in expense ratio compounds heavily over 20 years.
- A fund beating its benchmark by 2% consistently is excellent. Most that top one-year charts do not repeat.
Frequently asked questions
What is a good annual return from mutual funds?
Over 10+ years: 11–13% for diversified equity, 8–10% for hybrid, 6–7% for debt. Anything promising 20%+ consistently should be treated with suspicion.
How are mutual funds taxed in India?
Equity funds held over a year: 12.5% LTCG above ₹1.25 lakh of gains. Under a year: 20% STCG. Debt funds are taxed at your income slab regardless of holding period.
Is absolute return or CAGR more important?
CAGR. Absolute return ignores time entirely, so a 90% gain over 20 years looks identical to 90% over 2 years — but they are wildly different investments.
Does this include the expense ratio?
Yes, indirectly. NAV is published after expenses, so the value you enter already reflects the fund's costs.
Want the theory behind the numbers? Read our mutual fund guides on the Money Blog.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 30 Sep 2026. How we check these numbers.