Most investors tend to look at last 1-year returns in a mutual fund scheme before choosing one to invest in. You can take a fund's one-year returns and its benchmark on eve ry day for a period of five years. Fore example, You calculate the one-year returns as on April 1, 2011 for the fund and the benchmark. Then you calculate the one-year returns as on April 2, 2011 then April 3, 2011 then April 4, 2011 and so on until July 1, 2016. Hence, measuring fund returns at different points of time, or in different market cycles, will tell you whether the fund was always doing well or not.

Source: Economic Times September 08, 2016 02:41 UTC