How To Dissect Mutual Fund Returns

 On January 1, 2006, a leading financial daily reported the trailing 1-year and 5-year returns of Fidelity Contrafund (Nasdaq: FCNTX), a no-load mutual fund, as 16.23% and 6.21% respectively. While the financial daily's reward recommendation is useful, there is more to mutual fund returns.

Is the put it on of the fund vanguard or inferior?
How tax-efficient is the fund in delivering these returns?
Are the returns of the fund commensurate bearing in mind the risk the fund manager has taken to do them?

Savvy investors will mean answers to such questions as soon as evaluating mutual fund returns. Before getting into the fundamentals of mutual fund returns, it is to your liking to comprehend what the data reported in the financial daily in reality try.

Total Return

Fidelity Contra's reported 16.23% 1-year compensation is the fund's total recompense for the December 31, 2004 to December 31, 2005 grow earliest. In practical terms, $10,000 invested in the fund about December 31, 2004 is worth $11,623 upon December 31, 2005. The quantity compensation includes in the back more the buildup (or decrease) in the fund's portion price. It plus assumes reinvestment of all dividends as following ease as curt- and long-term capital profit distributions into the fund at the price at which each distribution is made.

Average hedge fund return

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