The amount you invest, the timing and the price you paid for the shares will determine your return when investing in a mutual fund. Getty Images By Nellie S. Huang, Senior Associate Editor May 17, 2019 QMy mutual fund statement shows that I’ve lost money over the past four years, but the results published by the fund company show annualized returns of more than 9% over three- and five-year periods. Why is my return different? AMany investors share your puzzlement when their returns differ from the annualized returns published by the fund company and the financial press. The widely publicized annualized returns for your fund are time weighted — they measure the annual rate of change in a fund’s share price, averaged over a specific period of time. A fund’s five-year annualized return as of March 31, 2019, for example, is the average annual growth rate of the fund’s share price from March 31, 2014, to March 31, 2019. Sponsored Content SEE ALSO: 11 of the Best Index Funds to Buy Today The total return you’ve earned in your fund, however, is different from the fund’s reported annualized return. That’s because it is dollar weighted — it hinges on the amount of money you have put into the fund, as well as when you put it in and what price you paid for the shares. Essentially, your return reflects how well you timed your investment. If, for example, you made a lump-sum investment in your fund just as it hit a high mark four years ago, it might explain why your return is less than the fund’s annualized returns shown in your statement. Investor behavior often gets in the way of performance. Simply put, the average investor has poor timing. Investors frequently buy high — chasing good returns in a fund, say — and sell low, when the market gets rocky. Advertisement The habit can be costly. Research firm Dalbar publishes an annual study of investor behavior, which tracks cash flows in and out of stock funds. In 2018, the average investor trailed Standard & Poor’s 500-stock index by 5.0 percentage points. (The S&P 500 lost 4.4% in 2018, which means the average investor lost 9.4%.) “Judging by the cash flows we saw, investors sensed danger in the markets and decreased their exposure, but not nearly enough to prevent serious losses,” says Dalbar’s Cory Clark. Because timing the market correctly is nearly impossible, spreading out your investments at regular intervals rather than investing a lump sum all at once is one way to lower the risk that you’ll invest at the wrong time. The practice, known as dollar-cost averaging, also lowers the average cost per share over time because investing a like amount over regular intervals ensures that you’ll buy more shares when prices are low and fewer when they’re high — which will no doubt improve your personal returns relative to your fund’s annualized figures. SEE ALSO: The 25 Best Low-Fee Mutual Funds to Buy Now Got a question? Ask Kiplinger at email@example.com.