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What Are Rolling Returns and How to Calculate Them?

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Jun 17, 2024
5 Mins

Point-to-point returns evaluate performance between two specific dates but may not effectively summarize overall growth. Conversely, rolling returns offer a more comprehensive insight.

To calculate rolling returns, one examines the NAV on a given date and compares it with the NAV from the same date in previous years to estimate the gains.

This method generates a time series of rolling returns over an entire timeline. Determining the range of rolling returns involves identifying the highest and lowest values in this sequence. The average return helps in understanding the expected return.

When investing in mutual funds, analyzing historical rolling returns for the desired investment period is crucial to assess possible returns and risks. For equity funds, at least 5 years of rolling return data is advised, with more being preferable.

Rolling returns provide critical insights that assist investors in crafting more effective investment strategies.

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