DEFINITION of 'Holding Period Return/Yield'
The total return received from holding an asset or portfolio of assets over a period of time, generally expressed as a percentage. Holding period return/yield is calculated on the basis of total returns from the asset or portfolio – i.e. income plus changes in value. It is particularly useful for comparing returns between investments held for different periods of time.
Holding Period Return (HPR) and annualized HPR for returns over multiple years can be calculated as follows:
Holding Period Return =
Income + (End of Period Value – Initial Value) / Initial Value
Annualized HPR =
{[(Income + (End of Period Value – Initial Value)] / Initial Value+ 1}^{1/t} – 1
where t = number of years.
Returns for regular time periods such as quarters or years can be converted to a holding period return through the following formula:
(1 + HPR) = (1 + r_{1}) x (1 + r_{2}) x (1 + r_{3}) x (1 + r_{4}) where r_{1}, r_{2}, r_{3}_{ }and r_{4}_{ }are periodic returns.
Thus, HPR = [(1 + r_{1}) x (1 + r_{2}) x (1 + r_{3}) x (1 + r_{4})] – 1
BREAKING DOWN 'Holding Period Return/Yield'
The following are some examples of calculating holding period return:
1. What is the HPR for an investor who bought a stock a year ago at $50 and received $5 in dividends over the year, if the stock is now trading at $60?
HPR = [5 + (60 – 50)] / 50 = 30%
2. Which investment performed better? Mutual Fund X that was held for three years, during which it appreciated from $100 to $150 and provided $5 in distributions, or Mutual Fund B that went from $200 to $320 and generated $10 in distributions over four years?
HPR for Fund X = [5 + (150 – 100)] / 100 = 55%
HPR for Fund B = [10 + (320 – 200)] / 200 = 65%
Note that Fund B had the higher HPR, but it was held for four years, as opposed to the three years for which Fund X was held. Since the time periods are different, this requires annualized HPR to be calculated, as shown below.
3. Calculation of annualized HPR:
Annualized HPR for Fund X = (0.55 + 1)^{1/3} – 1 = 15.73%
Annualized HPR for Fund B = (0.65 + 1)^{1/4} – 1 = 13.34%
Thus, despite having the lower HPR, Fund X was clearly the superior investment.
4. Your stock portfolio had the following returns in the four quarters of a given year: +8%, 5%, +6%, +4%. How did it compare against the benchmark index, which had total returns of 12% over the year?
HPR for your stock portfolio = [(1 + 0.08) x (1 – 0.05) x (1 + 0.06) x (1 + 0.04)] – 1 = 13.1%
Your portfolio therefore outperformed the index by more than a percentage point (however, the risk of the portfolio should also be compared to that of the index to evaluate if the added return was generated by taking significantly higher risk).

Actual Return
The actual gain or loss of an investor. This can be expressed ... 
Appreciation
An increase in the value of an asset over time. The increase ... 
Dividend Adjusted Return
When a stock's return is calculated using not only the stock's ... 
Yield
The income return on an investment. This refers to the interest ... 
Annual Percentage Yield  APY
The effective annual rate of return taking into account the effect ... 
InflationAdjusted Return
A measure of return that accounts for the return period's inflation ...

Home & Auto
Are ReturnOfPremium Riders Worth It?
Find out if this policy coverage will add money to your pocket, or cost you in the long run. 
Bonds & Fixed Income
Accelerating Returns With Continuous Compounding
Investopedia explains the natural log and exponential functions used to calculate this value. 
Investing Basics
Predicting Investment Losses
How much you stand to lose on an investment and how long those losses will last can be gauged ahead of time. 
Investing Basics
Elves And Gnomes: Fairy Tale Investment Terms
What do elves have to do with investing? Meet the fairytale creatures running around Wall Street. 
Investing Basics
Investment Strategies For Volatile Markets
Read on to learn some investment strategies when the volatility is high. 
Options & Futures
Tailoring Your Investment Plan
Start your own investing adventure with the help of some simple guidelines. 
Investing Basics
Diversification: Protecting Portfolios From Mass Destruction
This investing strategy retains its charm as a protection against random events in the market. 
Investing News
Looking Into Sin Investments
The stigma that a sin stock receives seems to be more concentrated among individual investors who are certainly entitled to avoid them. The overall market, on the other hand, seems to look favorably ... 
Investing Basics
Finding Your Margin Investment Sweet Spot
Borrowing to increase profits isn't for the faint of heart, but margin trading can mean big returns. 
Savings
How To Maximize Returns By Choosing The SelfDirected Option
Make sure your 401(k) plan has the selfdirected option to ensure that your retirement is as comfortable as possible.

How do I use the holding period return yield to evaluate my bond portfolio?
The holding period return yield formula can be used to compare the yields of different bonds in your portfolio over a given ... Read Full Answer >> 
How can I use the holding period return yield to determine whether or not I should ...
Use the holding period return yield formula to determine whether the time is right to sell your bond. With this calculation, ... Read Full Answer >> 
How do I calculate my portfolio's investment returns and performance?
The first step in calculating returns for your investment portfolio is identifying and gathering the requisite data. Once ... Read Full Answer >> 
How do I calculate the holding period return yield on a zerocoupon bond?
In finance, the holding period return yield is the total return from an asset over time that takes into account any income ... Read Full Answer >> 
How does holding period return yield differ between short and long positions in the ...
Holding period return yield differs between short and long positions in the market because there are greater costs and risks ... Read Full Answer >> 
What is the difference between passive and active asset management?
Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>