Trailing Returns Look Back. Rolling Returns Look Deeper

Rolling Returns and Trailing Returns are a way to measure the performance of the investment over a period of time. Trailing returns assess the fund for a fixed period of time like one, three and five years, while  rolling returns track the performance at various points that update till the time concludes.

To determine the performance of a mutual fund follow its rolling returns and trailing returns. When you are able to analyze the significance of rolling and trailing returns, their differences and shortcomings, it is easy to swiftly assess and evaluate the past performance of a mutual fund and  predict its future.

Rolling Returns

What is  Rolling Returns in a mutual fund?

Rolling return is the average return of a mutual fund during specific period of time that gives entire assessment of the funds performance. It provides continuous performance of  a fund. Rolling returns are accurate and the best parameter for predicting the future performance of the mutual fund.

Rolling returns take into account on daily basis of the fund’s performance and offers the average for that particular time period.

Uses and Features of Rolling Returns:

1. It acts as an indicator of the average return of a fund in a particular given time.
2. It has minimum margin error as it is calculated on daily basis.
3. It provides wider scope of understanding about the performance of a mutual fund which can help  to make a prediction about the funds future performance.
4. The assessment derived from the rolling return is accurate.

TRAILING RETURNS

 

Trailing returns are point to point returns provided by a mutual fund. It is not a reference to the fund’s average performance. Trailing returns are used to calculate the funds profit or loss.

Trailing return is little helpful to get detailed assessment of the fund. It should be used carefully while assessing the overall performance of the fund and predict the future performance of the fund.

Uses and Features of Trailing Returns

 

1. Trailing returns is an indicator of the performance of the mutual fund. It does not calculate the average performance of the mutual fund.
2. It provides the exact assessment of the funds performance between two particular points in time by giving specific data about profit or loss.
3. It is easy to understand about the profit or loss of the fund.
4. It does not provide in-depth understanding of the funds performance.