Return On Investment (ROI) Yields

The yield that your invested monies have earned. This yield depends on the performance of the investment and when you made your purchases and redemptions. The formula for ROI yield is:

where the yield is 'i', and where each term is the number of years between the ending date of the yield term (the date the yield is being calculated 'to') and the date of the particular transaction. The variables inv₁ and dist₁ represent investments and distributions, respectively. A redemption is a negative investment, where a purchase is a positive investment. All investments and distributions from the beginning yield term date (inclusive) to the ending yield term date (inclusive) are included in the calculation. The Ending value is the closing value of the investment on the ending date of the yield term. The Starting value is the opening value of the investment on the beginning date of the yield term. (This opening value is the same as the closing value of the previous day.) If either the Starting value or Ending value are negative, a yield cannot be calculated, and will be reported as "N/A".

Annualizing:

By default, yields for terms less than one year are not annualized, and yields for terms greater than one year are average annualized. Whether or not to average annualize yields can be controlled from the Preferences - Yield dialog.

Example Calculation:
Assume we are calculating the 6 month average annualized ROI yield ending on 7/31/2003. The date range for this yield term would be 2/1/2003 through 7/31/2003, inclusive of gains and any transactions on both the starting and ending dates. The closing value of this hypothetical investment on 1/31/2003 was $1,000, which is the opening value on the beginning of yield term, 2/1/2003. The closing value of the investment on 7/31/2003 was $2,310. There was one purchase within this time period for $1,200 on 3/15/2003, and a distribution was received in cash on 6/30/2003 for $50. The equation to solve for this yield would look like:

Fund Manager iteratively solves this equation for 'i', reporting a 6 month average annualized ROI yield value of 17.73%.

See Also