Time-weighted rate of return is a common algorithm to calculate the cumulative rate of return of funds.

This algorithm divides the performance in different time intervals into the total rate of return. For example, a time interval is divided into three subintervals, where R 1, R2 and R3 are the returns of a fund in these three subintervals, which are -3%, 5% and 10% respectively. An algorithm based on time-weighted returns.

The time-weighted rate of return of the Fund during this period is r = (1+r1) (1+R2) (1+R3)-1= (1-3%) (/kloc-) As for the average rate of return, as the name implies, it is to calculate the average performance of the rate of return over a period of time.

On average rate of return;

As the name implies, it calculates the average performance of the rate of return over a period of time. The first thing people may think of is the arithmetic average rate of return. The arithmetic average rate of return is similar to the average, that is, the rate of return of all subintervals is added up and divided by the number of subintervals.

According to the example of this fund above, the arithmetic average rate of return of this fund during this period = (-3%+5%+ 10%)/3 = 4%. Besides arithmetic average rate of return, geometric average rate of return is also an average rate of return. The formula is rg = [(1+r1) (1+R2) (1+R3) (1+rn)] (1/n)-/kloc-0.