Calculate Annualized Rate of Return Formula | Definition

Calculate Annualized Rate of Return

Formula to Calculate Annualized Rate of Return

The rate of return over a given period expressed on an annual basis or as a return per year. Annualized rate of return is computed on a time-weighted basis.

(1) In Russell Performance Attribution (RPA), the geometric average investment return for a period greater than or equal to one year, expressed as a 12-month period.

(2) In Russell Performance Universes (RPU), annualized rate of return is calculated as follows:

Where	Equals
Ra	Annualized rate of return
Rc	Cumulative rate of return
P	Periodicity (number of time periods in a year: 4 for quarterly data, 12 for monthly data)
N	Number of observations

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