Point-to-Point Returns

Point-to-point return answers a very simple question: if I had put money in on date A and pulled it out on date B, how much would it have changed? It is the most intuitive way to read a fund's performance and the one you will see most often on factsheets and on platforms like Groww, Zerodha Coin and AMFI's site.

How it works

You take the NAV (or value) on the start date and the NAV on the end date, and compute the percentage change. For periods longer than a year, this is usually annualised into a CAGR (compound annual growth rate) so different time spans can be compared fairly.

For example, a fund's "3-year return" quoted today is a point-to-point figure: it measures from exactly three years ago to now and says nothing about the bumpy ride in between.

The catch

The big weakness is start- and end-date sensitivity. Because it depends entirely on two snapshots, a point-to-point number can flatter or punish a fund based on luck of timing. A 3-year return measured from a March 2020 market crash bottom will look spectacular; the same fund measured from a market peak will look poor, even if nothing about the fund changed.

In India

This is why SEBI and AMFI require funds to disclose returns across multiple standard periods (1, 3, 5, 10 years and since inception) rather than a single number, and to show performance against a benchmark like the Nifty 50 TRI.

A better companion: rolling returns

Serious analysts pair point-to-point returns with rolling returns, which average the return over many overlapping windows (say, every 3-year period over the last decade). Rolling returns remove the single-date bias and show how consistent a fund really is.

The practical takeaway for an Indian investor: never judge a fund on one headline point-to-point figure, especially one ending on a market high. Check several periods, compare against the right benchmark, and look at rolling returns before deciding. A fund that wins on one start date can easily lose on another.