Rolling returns vs trailing returns: What should investors keep track of?

If you are a new investor and are deliberating over which mutual fund scheme to invest into, you are likely to be tempted by the returns delivered by different schemes. Rolling returns are also known as rolling time period returns and are annualised average returns for a time period. Trailing returns are the annualised returns given by a mutual fund scheme over a given period of time calculated from one point to another. Since the returns are calculated based on a specific time period i.e., between the first day of the year 1 and the last day of fifth year – they are known as trailing returns. Wealth advisors assert that rolling returns are a better indicator of a mutual fund’s performance over a period of time, particularly when you are judging a scheme based primarily on its historical performance.