How is the return on an investment fund calculated?
Finance | 04.03.2018 | MoraBanc editorial staff
We’ll talk now about how calculate the return on an investment fund:
To calculate the return on a unitholder’s shares, i.e. to know how much they have earned, you need to determine the percentage of variation in net asset value between the date of subscription/purchase and the current date (or if the units have been sold, the date of redemption).
Therefore, the return delivered by a fund may be either positive or negative depending on the performance of net asset value.
Return = [(final net asset value – initial net asset value) / initial net asset value] X 100
Bellow is an example in order to better illustrate the explanation:
Two years ago Juan invested €5,000 in an investment fund and subscribed for 50 units with a net asset value of €100 per unit.
Today he has redeemed the 50 units at a net asset value of €120 per unit, thus receiving €6,000.
He has earned a return of 20%:
R = [(6,000 – 5,000) / 5,000 ] X 100 = 20%
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