human
Can you explain the average rate of return on a mutual fund?
assistant
The average rate of return on a mutual fund is an annualized rate of return that measures the average return of a mutual fund over time. It takes into account the dividends and capital gains from the fund’s investments, but does not factor in any initial investment or any other fees associated with the fund. Mutual funds are known for their diversification benefits, which help minimize risk and can potentially increase long-term returns. Generally, the average rate of return of a mutual fund is compared to a benchmark such as the S&P 500 or an industry-specific index.