YTD (Year-to-Date) in Mutual Funds: Meaning & How to Use It

Year to Date (YTD) refers to the period from the first day of the current year up to the current date. In a fiscal year, it refers to the period up to the current date starting from April 1. Governments, organisations and corporations often use this term for external audit and accounting purposes. The fiscal year in India starts on April 1 and ends on March 31. 

What does YTD mean in Mutual Funds?

YTD in Mutual Funds helps in analysing the trend of a Mutual Fund over time or comparing the performance with other Mutual Funds. Fund managers often use this parameter to review financial statements and compare them to their past performances. Read on to learn more about YTD in terms of Mutual Funds.

Managers and entities analyse and compare the current financial statements against the past financial statements for the equivalent periods, on a daily basis. Such comparisons help in identifying the trends and performances of the funds during the season.

YTD financial statements help the fund managers to check the fund's financial health and performance on a regular basis instead of waiting for the fiscal year to end.

Common YTD types

To understand YTD in Mutual Funds, let’s look at the different types:

• Year to Date Return

YTD Return is the profit a Mutual Fund investment makes since the current year’s first day. Analysts and investors use this information to assess the Mutual Fund’s performance and make informed decisions.

• Year to Date Earnings

YTD Earnings refer to the amount of money a Mutual Fund investor has earned from the beginning of the year up to the current date. To calculate the amount, one must subtract the expenses from the revenue. This helps investors track their goals and estimate expense ratios, tax payments and other overhead costs.

• Year to Date Net Pay

Year to Date Net Pay refers to the investor’s earnings compared to the withholdings. To calculate the YTD Net Pay, one must subtract the tax and other withholdings from the gross revenue. YTD Net Pay includes all the earnings from a fund from the beginning of a year up to the current date minus the tax and other benefits withheld.

What is Month to Date?

Month to Date or MTD is the period between the beginning of the current month up to the current date, at the end of the day. Typically, it does not include today's date as the exchange may not have closed for that day. For instance, if today is June 15, the MTD will refer to the period from June 01 to June 14. Investors use MTD to analyse their earnings and returns. 

How to calculate Year to Date?

The first step to calculate YTD is to collect the required information, including the starting date of the year and the end date of the year in question. Correct information helps the investor monitor the portfolio development, returns and worth.

The mathematical formula to calculate YTD in Mutual Funds is as follows:

To calculate the YTD return on Mutual Fund investment, subtract its amount on the current year’s first day from its value on the current date. Then, divide the difference by its value on the year’s first day and multiply the result by 100 to get a figure in percentage. 

Annualising YTD Yield

The calculation process becomes more complex when representing interest or returns in annual percentage rates. However, the investor must annualise the yield to compare the returns over various periods. If the portfolio gains by 4% in June, the YTD helps determine if the performance is enough to beat last year's returns at 8%.

To annualise the YTD yield in fractions, divide the fund's current value by its initial value. Then, raise the fraction to the power of 12 and divide it by the number of months passed. Subtract 1 from the result and multiply it by 100 to get a figure in percentage.

YTD on a Pay Stub

Employed individuals must have seen YTD on their Pay Stubs. The figure indicates the employee’s total earnings from the beginning of the year up to the recent date. Many Pay Stubs also show a running total of Year to Date earnings, including the net pay, gross wages or both. Some Pay Stubs also provide a tally of the employee's taxes, deductions, etc.

Calculating the YTD Returns

Year to Date = {(value as on the specified date / value at the start of the year) - 1} x 100

Suppose an investor buys shares worth ₹ 200 per share in a company on Jan 01. In March, the value increases to ₹ 202 per share. So, in this scenario the YTD can be calculated, using the formula:

YTD = {(₹ 202/ ₹ 200) – 1} x 100

After this calculation, the result will be 1%. The next step is to calculate the annualised growth rate. Since the growth is 1% in the year’s first quarter, the annualised growth rate will be 1x4 = 4%.

YTD is a crucial metric that helps assess a Mutual Fund's growth. Investors and fund managers can use this metric to examine performance trends during a year instead of waiting for the results at the end of the year. Therefore, it is an easy and quick way to measure a fund's performance over time. However, it is not the only parameter to gauge a fund's development. Investors must use a combination of various metrics for a better perspective.