What are the types of returns one can expect from a Mutual Fund?
Mutual Funds give returns in two ways – Capital Appreciation or Dividend Distribution. Capital Appreciation : An increase in the value of the units of the fund is known as capital appreciation. As the value of individual securities in the fund increases, the fund’s unit price increases. An investor can book a profit by selling the units at prices higher than the price at which he bought the units. Dividend Distribution : The profit earned by the fund is distributed among unit holders in the form of dividends. Dividend distribution again is of two types. It can either be re-invested in the fund or can be on paid to the investor.
