How to Track a Mutual Fund

Not all mutual funds perform well. The days of "buy and walk away" have long passed, due to volatile markets and a constantly shifting economy. You have to track your mutual fund to make sure that you are not losing money and to measure whether you receive a decent return on your investment. You can track your fund by paying attention to the major elements of investment profits. Track each of these elements to get a balanced picture of how your mutual fund is doing.

Subtract your original net asset value, or NAV, from your current one. The NAV is simply the price of a share of the mutual fund on any given day. You should write down the original NAV when you purchase the fund, then watch to see if that value rises. Mutual funds issue an NAV figure at the close of each day. The value of a share comes from the total value of the fund, divided by the number of shares outstanding, less any expenses. On the day you check the NAV, subtract your original NAV from the current one. For example, if your current NAV is $26 and you bought shares for $25, you have a one dollar growth in NAV. Multiply this times the number of shares you own to see how much money you made. Note that if the current NAV is higher than the original NAV, the result of your subtraction will be a negative number showing how much money you lost.

Compare interest or dividend rates. Bond funds pay interest, and stock funds may pay dividends. Track the improvement in interest rates or dividend rates. Mutual funds publish current rate information daily. You don't necessarily have to see a growth in the rate the fund pays, as long as it doesn't go down. A mutual fund experiencing declining interest or dividend rates reduces your income. This is a sign that fund managers are making bad investment decisions, or that the economy is working against the objectives of the fund.

Measure total return. Your best view of the overall performance of your mutual fund is total return. This figure combines the change in the NAV with the interest or dividend rate. For example, a fund whose NAV rises 2 percent while paying a dividend of 2 percent has a total return of 4 percent. Note that these figures may not always move in the same direction. You can lose NAV while receiving a higher interest rate, for example.