# Q-Annual Returns Calculation



## AbleEng (May 9, 2021)

I have an anomaly that I can't figure out. The rates of return of an equity mutual fund diverge from my own calculations and I don't understand why. I have provided the NAV and % returns from the Morningstar performance page as well as my calculated rate of return. They match closely for some years, but are very different for others. Can someone explain why this is?

Year 2015 2016 2017 2018 2019 2020
NAV 26.89 27.64 31.4 29.08 35.63 45.22
Ttlret 18.02 4.28 18.28 -3.57 22.86 28.42
Calc % 17.58% 2.79% 13.60% -7.39% 22.52% 26.92%
Annual Avg Return formula is (end value/start value) -1= %

Tried the CAGR; its way off.
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## GreatLaker (Mar 23, 2014)

Canadian Couch Potato: How Do You Measure Your Rate of Return?

Are you adding or removing funds from your portfolio?
Are distributions paid in cash or reinvested?
Are you spending dividends or distributions paid by the investments? 
Are any of your holdings priced in US$
All of those things can make the published returns, which assume a fixed amount invested during the time the return is measured, and all dividends & distributions reinvested, differ from your own calculations.


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## AbleEng (May 9, 2021)

GreatLaker said:


> Canadian Couch Potato: How Do You Measure Your Rate of Return?
> 
> Are you adding or removing funds from your portfolio?
> Are distributions paid in cash or reinvested?
> ...


Ah....I see. Keep in mind that these figures I showed you are all Total Returns.
Then all we can do is look at the results and enjoy or be saddened. The only way of comparing them to other investments is via NAV charts and comparison to their indices.


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## GreatLaker (Mar 23, 2014)

If you want to compare your results to published results of a fund or index, you need Time Weighted Rate of Return (TWRR). It is explained in the blog post to which I linked above. Calculating it requires entering all contributions and withdrawals from your investments. But ignore dividends and distributions received, unless they are withdrawn from the portfolio.

This spreadsheet can calculate TWRR for one year: Modified Dietz Rate of Return Calculator
(the above link will open a spreadsheet)

This spreadsheet can calculate TWRR for multi-year periods: Bogleheads Calculating Personal Returns

Be careful comparing your returns for individual stocks, funds and accounts. It can lead performance chasing and buy-high / sell-low behaviour.


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## AbleEng (May 9, 2021)

GreatLaker said:


> If you want to compare your results to published results of a fund or index, you need Time Weighted Rate of Return (TWRR). It is explained in the blog post to which I linked above. Calculating it requires entering all contributions and withdrawals from your investments. But ignore dividends and distributions received, unless they are withdrawn from the portfolio.
> 
> This spreadsheet can calculate TWRR for one year: Modified Dietz Rate of Return Calculator
> (the above link will open a spreadsheet)
> ...


Wow. Thank you. No one seemed to tackle this. Its very informative. I get the jist of it and will look at at more closely.
Re: Buy/sell behaviour: yes, I understand.


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## Spudd (Oct 11, 2011)

AbleEng said:


> Wow. Thank you. No one seemed to tackle this. Its very informative. I get the jist of it and will look at at more closely.
> Re: Buy/sell behaviour: yes, I understand.


Also, it's been the law for the past couple of years or so that your broker needs to provide you with personalized return figures for your account. So for your overall account you should be able to track down the return numbers, at least.


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## AbleEng (May 9, 2021)

Spudd said:


> Also, it's been the law for the past couple of years or so that your broker needs to provide you with personalized return figures for your account. So for your overall account you should be able to track down the return numbers, at least.


My broker has provided the explanation and a source for the dividend amounts at various times. I haven't looked at this yet, but I now understand the process and can postpone my review of them. The mystery has been solved. Thanks for your help with this. I can now remove the matter from my mind.


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