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:

Formula for Annualized Rate of Return

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


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

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