How to Calculate Mutual Fund Percentage Returns With Distributions
Based on the investment objectives of a particular mutual fund, dividend and capital gains distributions may represent a significant portion of the total return. The simple step of subtracting the starting share price from the ending share price will not give an accurate total return value. Adjusting these share values for the distributions will allow you to accurately calculate the return from a mutual fund.
Locate the website for the mutual fund on which you want to calculate the return percentage. On the website find the page listing historical distributions and make a note of the fund's stock market symbol.
Step 2Look up the fund's share price for the start date and end date of the period for the return calculation. If the fund's website does not provide day-by-day share price information, use the fund's symbol on Yahoo! Finance or Google Finance and select "Historical Prices" from the quote page menu.
Step 3Add up the mutual fund distributions per share for the selected time period. Include dividends, short-term and long-term capital gain distributions in the total.
Step 4Add the total amount of distributions to the end date share price. For example, you have a start date price of $10, total distributions of $2.50 and an end date share price of $15. The result for this step would be $15 plus $2.50 equals $17.50.
Step 5Subtract the start date share price from the end date share price plus the distribution amount previous calculated. Divide the result by the start date share price. Multiply the result times 100 to convert the result to a percentage investment return for the selected time period. Using the example figures, $17.50 minus $10 equals $7.50. Divide $7.50 into $10 and multiply times 100 for a gain of 75 percent.
References
Tips
- If your holding period for the fund is more than a year, you can calculate annual rates of return using the RATE function on a spreadsheet.
- Stock mutual funds typically pay dividends quarterly and bond funds every month. Capital gains are usually paid once a year in December. Make sure you account for all of the distributions made during your selected time frame.
- You can use the calculation method outlined to set up a spreadsheet to keep a running performance result of your fund. Just add in new distributions and update the most recent share price.
Writer Bio
Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.