Average Annual Rate of Return Calculation | Formula

Average Annual Rate of Return

Average Annual Rate of Return Calculation Formula

Arithmetic average of a portfolio's returns over a specific period of time or set of observations.

In Russell Style Classification (RSC), average rate of return is calculated as follows:

Where	Equals
__ R	Average rate of return
Rt	Return at time t
T	Number of time points

In Russell Performance Universes (RPU), the formula for average rate of return is:

Where	Equals
u	Average rate of return
Ri	i-th return
n	Number of observations

For over 1,000 additional terms and definitions please see our Investment Glossary Guide.

Related to Average Annual Rate of Return Calculation:

• Geographical Hedge Fund Guides
• Hedge Fund Employment Guide
• Financial Certification
• Investment Book
• Hedge Fund Terms and Definitions

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