How to Compare Mutual Fund Rolling Returns for Consistency
If you want to evaluate the true consistency of an investment, you must learn how to compare mutual fund rolling returns rather than relying on standard point-to-point trailing returns. Traditional CAGR calculations suffer from severe entry and exit date bias, which is why smart investors use MyPlexus to check rolling performance over multiple time frames.
What Are Rolling Returns?
Rolling returns measure the performance of a fund over consecutive overlapping periods. For example, instead of looking at the return from January 2021 to December 2023 (a single 3-year point-to-point return), a 3-year rolling return calculates the 3-year CAGR for every single day or week during that period. This gives hundreds of data points, showing how the fund performed in different market cycles.
CAGR vs. Rolling Returns: The Real Difference
Point-to-point returns can easily mislead investors. If a fund happened to start right before a massive bull run, its trailing 3-year return will look spectacular. However, if you roll the returns, you might find that in 40% of the periods, the fund actually underperformed its index. Rolling returns completely eliminate this timing bias, showing the probability of achieving a positive return.
Steps to Compare Mutual Fund Rolling Returns on MyPlexus
MyPlexus hosts a powerful rolling return calculator that operates on daily Net Asset Value (NAV) data. Here is how you can use it:
- Search for your target mutual fund in our database.
- Select the rolling return analysis tab.
- Choose your holding period (e.g., 3 years or 5 years) and rolling frequency.
- Compare the resulting curves against the benchmark index.
Achieve Long-Term Consistency
By analyzing rolling return probabilities, you can select funds that offer steady outperformance rather than one-time spikes. Start building a robust SIP today. Learn more at MyPlexus Wealth Management and align your portfolio with consistency.
