How is the return on an investment fund calculated?
Andorra Expats | 04.03.2018 | MoraBanc editorial staff
In previous posts we explained to you what an investment fund is and what are its main features.
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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