What is YTD in Mutual Funds? Meaning, Calculation & Importance

The YTD full form is Year to Date, it refers to the date that starts from the first day of the current calendar year to the present day. For mutual funds, the YTD shows the return that a mutual fund generates from the 1^st January of the current year until today. The YTD helps investors know how a mutual fund may perform in the short term within the current financial year. This also helps them to compare the different funds, track market trends, and review  whether their investment strategy is aligned with current market conditions. This article explains YTD meaning, how it works, and more.  

How is YTD Return Calculated in Mutual Funds? 

The process of calculating the year to date return in mutual funds is simple. It is generally calculated by first measuring the percentage change in the fund’s value from the first day of the calendar year to the current date. The formula for calculating the YTD return is  

Formula: YTD return = [(Current Value − Initial Value) / Initial Value] * 100 

Where: 

Current value is the latest net asset value (NAV) of the mutual fund. 

Value at Start of Year refers to the NAV on January 1 of the current year. 

Here is an example for better understanding: Example: 

Let’s say the NAV of a mutual fund was ₹120 on January 1 and has risen to ₹138 today. Then by simply applying the formula, the YTD return would be 15%. This means that the mutual fund has delivered a 15% return so far this year, indicating the growth achieved since the beginning of the calendar year. 

After understanding what is YTD, the article further explains the types of YTD.  

Types of YTD in Mutual Funds 

The following are the different types of YTD in mutual funds: 

1. Absolute YTD Return: This shows the simple percentage change in a fund’s NAV from January 1 to the current date, without adjusting for risk or volatility. 
2. Benchmark YTD Return: The benchmark YTD return calculates the year-to-date performance of the index against which the mutual fund is compared. 
3. Category Average YTD Return: Reflects the average YTD performance of all mutual funds within the same category (e.g., large-cap, debt, hybrid). 
4. Portfolio YTD Return: The portfolio YTD return represents the combined year-to-date performance of all mutual fund investments held by an investor. 
5. Scheme-Level YTD Return: This indicates the YTD return of a specific mutual fund scheme. 

How YTD in Mutual Funds Helps Investors? 

The following are some ways through which YTD in mutual funds help investors: 

• Enables the comparison of various mutual funds and comparison with benchmark indices.  
• Assistance in evaluating the compatibility of the fund with the trends in the market or not.  
• Helps in making timely portfolio rebalancing decisions.  
• Gives the understanding of the recent gains or losses in the investment. 

Why is YTD Important for Mutual Fund Investors? 

The YTD is important for mutual fund investors because of the following reasons:  

• Tracks Current-Year Performance: This allows investors to determine the performance of a mutual fund within the current calendar year.  
• Enables Quick Comparison: It enables comparing various mutual funds and corresponding benchmark indexes.  
• Reflects Market Trends: Displays the response of the fund to the current market conditions and economic developments.  
• Supports Portfolio Review: Assists investors in determining whether their investments are consistent with financial objectives. 
• Assists in Rebalancing Decisions: Provides insight into whether adjustments are needed in asset allocation. 

Conclusion 

YTD in mutual fund is the gain that a fund has earned since the beginning of the current year up to the current date. It is computed by comparing the current NAV and the opening year NAV. It gives investors a clear report on how a fund has been doing in the current year. It also assists an investor to review the short-term progress, compare schemes, and review the alignment of the portfolio. While it should not replace long-term performance analysis, YTD remains a useful indicator for tracking current trends and making informed investment decisions through a reliable stock market trading app.