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Now since you have already read and understood(ho[efully) my previous 2 posts about Mutual Funds. Now I can go ahead in explaining what is little complex in understanding 'Total Returns' and 'NAV'.
For those who have not read previous posts about Mutual funds and NAV basics, following are the links(read them before continuing with this post
MF - basics|working|benefits
Net Asset value(NAV) basics
Starting with basics about what do you understand by 'total return', it stands for either 'Income/yield' or/and 'capital appreciation' in Mutual Funds. Capital appreciation is also referred as increase in NAV. Basically Capital Appreciation means if one or more of your fund's holdings is selling for a higher price than it was when the manager purchased it. If the manager sells the new, pricier stock or bond, then it is known as capital gain. 'Income/yield' from a Mutual Fund is calculated by adding the income distributions over the last 12 months and dividing that by the sum of the last month's ending NAV and adding any capital gains over the same 12-month period.
For those who have not read previous posts about Mutual funds and NAV basics, following are the links(read them before continuing with this post
MF - basics|working|benefits
Net Asset value(NAV) basics
Starting with basics about what do you understand by 'total return', it stands for either 'Income/yield' or/and 'capital appreciation' in Mutual Funds. Capital appreciation is also referred as increase in NAV. Basically Capital Appreciation means if one or more of your fund's holdings is selling for a higher price than it was when the manager purchased it. If the manager sells the new, pricier stock or bond, then it is known as capital gain. 'Income/yield' from a Mutual Fund is calculated by adding the income distributions over the last 12 months and dividing that by the sum of the last month's ending NAV and adding any capital gains over the same 12-month period.
