Rolling Returns Calculator
14.76%
26.08%
4.8%
92%
Simulated 3-Year Rolling Returns Distribution
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Rolling Return windowing
Calculates annualized return frequencies to check performance consistency and eliminate entry-point bias.
Worked Example: 3-Year Rolling Return
Rolling Returns: How Sameer Avoided the Trap of Lucky Timing
In 2021, Sameer looked at a fund with a 3-year point-to-point return of 25% p.a. It looked like an obvious buy. However, his advisor warned him that 2020 was an exceptional recovery year, which skewed the data. He suggested looking at the fund's rolling returns.
When Sameer analyzed the fund's 3-year rolling returns over the past decade, he saw a different picture. The average rolling return was 12%, with a maximum of 25% and a minimum of -2%. The fund was consistent, but not the miracle builder the 2021 snapshot suggested.
Point-to-point returns measure growth between two exact dates, making them highly sensitive to market peaks and troughs. Rolling returns calculate annualized returns continuously over overlapping intervals (e.g. every 3-year window rolled forward). This shows the actual return probability regardless of when you invest.
Never buy a mutual fund based solely on a single 3-year or 5-year point-to-point performance card. Check the rolling returns to understand the fund's historical consistency and true risk profile.
Frequently Asked Questions
What are rolling returns in mutual funds?
Rolling returns calculate annualized returns (CAGR) continuously over overlapping intervals (e.g., every 3-year window rolled forward daily or monthly) instead of measuring returns between two static dates.
Why are rolling returns superior to point-to-point returns?
Point-to-point returns suffer from 'timing bias' (they are highly sensitive to market peaks or crashes on the start and end dates). Rolling returns show the average historical return consistency and probability across all market cycles.
How do rolling returns help in fund selection?
They show you the frequency of positive returns and the probability of beating a benchmark. A fund with an average 3-year rolling return of 12% and low volatility is far more reliable than a volatile fund with a lucky 25% point-to-point return.
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