What is the meaning of “Return less than 1-year are absolute and over 1 year are annualised” in mutual funds?

Returns is simply the percentage gain you make on an investment. For example if you invest Rs 100, and it becomes Rs 110, then you make a 10% gain.

But this alone means nothing. You need to know the time period. If the 10% gain is made over two years then the per year gain you make is slightly less than 5%, it is about 4.88% due to compounding.

However if you make the 10% gain in 6 months, then the fund house may just show 10% and the period against it.

Returns in long term investments are much better with direct plan mutual funds. They may be upto 40% more than regular mutual funds. Make sure you see the words direct plan in all your mutual fund schemes. Else switch to direct as early as possible.