Absolute Return — Mutual Fund Term Explained

Total profit or loss as a simple percentage, without annualising. Misleading for comparing across different timeframes.

Absolute return is total profit or loss as a percentage of initial investment, without accounting for time. ₹1 lakh growing to ₹1.50 lakh = 50% absolute return.

Always use CAGR when comparing performance over different time periods.

Formula

Absolute Return = (Current Value − Invested Amount) ÷ Invested Amount × 100

Related terms

• CAGR — Compound Annual Growth Rate. Measures how much a lump sum investment grew per year on average. Not ideal for SIP returns — use XIRR instead.
• XIRR — Extended Internal Rate of Return. The most accurate way to calculate SIP returns — accounts for the exact timing and amount of each cash flow.
• Trailing Returns — Point-to-point returns calculated from today backwards. The most common return metric but sensitive to start/end dates.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.