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Can someone explain “Totals” for the “Avg. Annual Return (%) for 1-year”?

JimM

On the INVESTING tab Portfolio I have two funds listed that are displaying the “Avg Annual Return (%) for 1-year”. I’m okay with the values shown which are 29.39 and 12.70 but I don’t understand how this equals a Total of 24.76. Simply averaging gives 21.05, which is below Quicken’s value of 24.76. Assuming it is a type of weighted sum perhaps based upon Market Values which are respectively 25278.42 and 8452.95 I calculate 25.21 which is higher than Quicken’s value of 24.76. Any help would be appreciated.

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Comments

Sherlock

The Totals for the Avg. Annual Return (%) for 1-year should be using the same formula for all the transactions in the report range as described in the built-in help : press F1

It is in essence weighted by the size and returns of the individual investments but it isn't calculated that way.

q_lurker

You might consider looking at an Investment Performance Report for that period and account. That report can show the relevant investments and returns used in the calculation.

JimM

Sherlock and q_lurker, your responses definitely helped. Printing the performance report gives us some idea of what variables are being used to calculate the Avg Annual Return. Using the report, I’ve included an attachment with some explanations of where these variables come from. Additionally I provide an alternative method for the Avg Annual Return calculation. I’m not trying to compete with Quicken just trying to increase my intuitive understanding of what is going on. I’m new to the community so apparently I am not given the icon bar which allows one to easily post images but I hope you will be able to see the attachment. If not sorry I tried. And thanks again….

image.png

Jim_Harman

Quicken's calculation is the IRR or internal rate of return. It is the equivalent of the annual interest rate a savings account would have to have to match the return of the selected account or securities, including compounding. It also matches Excel's XIRR function.

Your formula does not take compounding into account.

Jim_Harman

BTW your formula is essentially what Quicken uses for the ROI (%) column in the Portfolio views

JimM

Thank you all for great input, it is very much appreciated.