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Rolling Returns

Reviewed by Vineeth | Updated on Feb 19, 2021



Rolling returns are also called as rolling time periods or rolling period returns. Rolling returns are annualised average returns over a time, which ends on a listed year. Rolling returns are critical in finding out the characteristics of returns over a holding period. This is comparable with the ones received by investors.

Studying a mutual fund scheme or portfolios rolling returns will reflect light on the historical performance over a given timeframe. This data often gives more precise details to investors which is much needed. Rolling returns can be made use of to smoothen the historical performance to numerous time periods in place of just one.

Understanding Rolling Returns

The main objective of the rolling returns is to emphasise on the frequency and ticket-size of investments phases that are considered good and bad.

The rolling returns are capable of providing much-improved details of a mutual fund scheme's overall performance history. What is more significant about rolling returns is that the latest developments do not influence the data.

For instance, the five-year rolling returns for the year 2000 covers the time between 1 Jan 1996 and 31 Dec 2000. The five-year rolling returns for 2001 is the average annual return from 1997 through 2002. A few of the investment analysis will break down a multi-year time in a series of a rolling period of one year.

By analysing rolling returns, investors can understand how well a fund has performed over a given timeframe. If investments display an annualised return of 9% over 120 months, this means that you invested on 1 Jan 2000 and realised your investment on 31 Dec at the end of the next ten years, by earning an annualised return of 9% per year. However, the returns over those ten years may have varied considerably.

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