When it comes to analysing the performance of mutual funds, most investors instinctively consider returns from a 1, 3, or 5-year perspective. While these figures do provide a snapshot, they often fail to show the complete picture of a fund’s performance.
Market cycles, the timing of your investment, and short-term volatility may all drastically impact these point-to-point returns.
That is where the role of rolling returns becomes important. Rolling return indicates, more realistically and consistently, the performance that a mutual fund would have given over a period of time, thus helping investors take a better long-term decision.
What are rolling returns?
Rolling returns measure the annualised returns of a mutual fund over a given period. Instead of taking a fixed start and end date, it calculates returns for all overlapping periods of that length.
For example, a 3-year rolling return for a fund with a 10-year history is calculated for every 3-year period:
- Jan 2016 – Jan 2019
- Feb 2019 – Feb 2022
- Mar 2022 – Mar 2025
…and so on, until the latest available date.
This approach generates a range of returns rather than a single number, offering a clearer picture of how the fund performed across different market phases.
How rolling returns are calculated
Rolling returns are typically calculated using the CAGR formula, applied to each overlapping period:
CAGR=Ending NAVStarting NAV1/n-1
Where:
- Ending NAV = NAV at the end of the period
- Starting NAV = NAV at the start of the period
- n = number of years (or fraction of year)
By moving the start date forward incrementally (daily, monthly, or quarterly), we get hundreds or even thousands of rolling return observations.
From this data, we could derive:
- Average rolling return: The mean return across all periods
- Best rolling return: The maximum annualised return achieved
- Worst rolling return: The minimum annualised return experienced
This information highlights both potential upside and downside something that a single CAGR number cannot capture.
Why rolling returns are important for investors
#1 Consistency across market cycles
Point-to-point returns could be heavily influenced by:
- Market highs or lows at the time of investment
- Short-term market movements
Rolling returns, on the other hand, show how consistently the fund has performed, irrespective of entry points. Investors can see whether a fund regularly outperforms its benchmark or only does so during specific periods.
#2 True risk and volatility
Rolling returns reveal:
- How frequently a fund generates negative returns
- Magnitude of losses in the worst-performing periods
This helps investors avoid a fund that is highly volatile, even if has strong point-to-point returns.
3. SIP planning
For investors investing through Systematic Investment Plans (SIPs), rolling returns are particularly relevant:
- SIP investments spread across different NAVs, similar to overlapping periods in rolling returns
- Funds with stable rolling returns tend to deliver smoother SIP returns over the long term
4. Better comparisons
Two funds may have similar 5-year CAGR today. However, rolling return analysis could reveal:
- Fund A outperformed its benchmark 70% of rolling periods
- Fund B outperformed its benchmark only 40% of rolling periods
This allows investors to identify funds that consistently deliver superior performance.
How Rolling Returns Differ from CAGR
| Metric | CAGR (Point-to-Point) | Rolling Returns |
| Measures | Single fixed period return | Performance across multiple overlapping periods |
| Consistency | Limited | High |
| Risk Insight | Low | High |
| Market timing bias | High | Low |
If CAGR tells you what a fund delivered over a certain period, then rolling returns tell you how reliable those returns are across different entry points.
Rolling returns will suggest to investors the consistency with which a mutual fund has performed over a period of time and not just by the ‘point-to-point’ return.
It tells us whether a fund reliably delivers growth, how often it outperforms its benchmark, and how it behaves during ups and downs in the market by showing the range of returns across multiple overlapping periods.
This makes the prospective returns, as well as the risks involved, more accurate and relevant for investors, thus making it easier to choose a fund that aligns with their long-term goals.
Rolling returns, are of interest for investors planning investments for long-term goals such as retirement or wealth creation. These returns can simulate entry points at various points in time and show how investments would have fared across different market cycles. This helps investors choose funds that exhibit smoother and more predictable performance.
In other words, rolling returns help make better decisions since they underline consistency, risk, and reliability-all attributes that are usually missed by point-to-point returns.
Ultimately, rolling returns are one of several tools investors could use to evaluate mutual funds. They complement other analyses by adding context and perspective but should be weighed with other aspects like fund objectives, expense ratios, and personal investment goals of the investors.
Their use as part of a broader approach allows making a more balanced and informed decision.
Invest wisely.
Happy investing.
Table Note: Data as of December 15, 2025
The securities quoted are for illustration only and are not recommendatory
Past performance is not an indicator for future returns.
Returns are on rolling CAGR basis and in %. Direct Plan-Growth option.
Those depicted over 1-Yr are compounded annualised.
Risk ratios are calculated over a 3-year period assuming a risk-free rate of 6% p.a.
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