How To Calculate Portfolio Return In 4 Steps | FortuneBuilders
How To Calculate Portfolio Return In 4 Steps | FortuneBuilders
Abstract
What Is Portfolio Return? Portfolio return is the gain or loss from an investment portfolio, typically made up of multiple asset types. Portfolio Return Formula The portfolio return formula might take you back to math class, but don't let that intimidate you. How To Calculate Expected Return Before you can calculate the expected return on your overall portfolio, you'll need to know the expected return on each asset held in the portfolio. The equation is as follows: WA = Weight of asset A RA = Expected return of asset A WB = Weight of asset B RB = Expected return of asset B WC = Weight of asset C RC = Expected return of asset C Limits Of Expected Return Calculating the expected return of an asset may take some guesswork. How To Calculate Portfolio Return For All Your Investments The only way to accurately calculate your portfolio return is to understand the performance of each individual asset. There a few factors that can influence your overall portfolio return to be aware of: Net asset value Holding period return Cash flow adjustments Annualized returns Net Asset Value Net asset value is the value of an asset minus the total cost of its liabilities. Holding Period Return Holding period return is one of the simplest methods for calculating investment returns.