Home › Glossary › Absolute return
Returns and performance
What is absolute return?
Absolute return is the simple percentage gain or loss on an investment, without adjusting for how long it was held.
How it works
Absolute return = (current value − amount invested) ÷ amount invested. Fund returns for periods under one year are shown this way; longer periods are annualised.
It is useful for short periods but misleading over long ones, because a 60% gain means something very different over 2 years than over 10.
Example
₹1 lakh that grows to ₹1.5 lakh has an absolute return of 50%. Over 3 years that is a CAGR of 14.47% a year; over 10 years, only 4.1% a year.
Keep in mind
- Always ask: over how many years?
- For SIPs, the absolute return understates the yearly return; use XIRR.
Questions people ask
When are absolute returns used?
For periods shorter than a year, such as a fund's 6-month return.
How do I turn an absolute return into a yearly one?
Use the CAGR formula with the number of years held.
Related terms
General information for education, not investment advice or a recommendation of any scheme. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance may or may not be sustained in future. Last reviewed 25 October 2026.