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For mutual funds, dividend payouts have not been considered

edited April 2013 in General
For mutual funds, dividend payouts have not been considered when calculating "Overall Gain", and hence an investment shows loss based on present and investment NAV even though the payout received has exceeded the investment amount. Why is that?


  • The overall gain gives you the absolute gain based on your investment as per the books of accounts. Hence, you see the loss on your investment due to the reduction in NAV.

    The NAV gets reduced because of the declared dividends. To know the actual return on your investment, use the XIRR reports, which will gives you true annualised return on your mutual funds, which takes care of the dividend received from mutual fund.

    So, for any asset, Annualised Return (XIRR) is the most important and accurate report which gives you the annualised return on any asset, even if have multiple buy, sell transactions in this asset over the period of time and also if you have received income (dividend/interest/other income) from this asset.
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