# Calculating Mutual Fund Returns [closed]

Using Thomson Reuters Eikon I can extract the monthly NAV and Dividen Payments of a fund. I would like to calculate the monthly returns of a fund now. Would this be the right approach?

# Fund Date NAV Div

1       1       10   -
1       2       11    1


Return = (11+1)/10 -1 = 0.2 = 20%

• That sounds correct. – phdstudent Sep 5 '18 at 16:02

If the dividend is received on the last day of the month then your approach $r=\frac{P_{t-1}-P_t+D}{P_{t-1}}$ is perfectly correct.
The Simple Dietz Method, which assumes that the dividend is received half-way in the month, proposes the formula $r=\frac{P_{t-1}-P_t+D}{P_{t-1}-D/2}$. As I said, this correction is probably unnecessary in your case. In my experience BTW mutual fund dividends do tend to occur in the latter part (days 20-31) of the month.
• But if we assume 3 time periods with prices: 10$, 20$, 40$respectively and one dividend in t=1 in the amount of 10$. Then the return in t=3 would equal 100% (40/20-1). The fact that there has been in a dividend in t=1 is not reflected here. Can will still say then that we are calculating returns with reinvested dividends? I hope it is somehow clear what I mean. – user9259005 Sep 5 '18 at 18:30
• To find the overall returns take $(1+r_1)(1+r_2)(1+r_3)-1$ and this will include the return from reinvesting the dividend from period 1. – Alex C Sep 5 '18 at 19:46