How Do I Calculate the Year-to-Date (YTD) Return on My Portfolio?

YTD returns help investors and analysts assess portfolio performance

To calculate the year-to-date (YTD) return on a portfolio, subtract the starting value from the current value and divide it by the starting value. Multiply by 100 to convert this figure into a percentage, which is more useful than the decimal format for comparisons of the returns of individual investments.

Key Takeaways

  • YTD return is the amount of profit (or loss) realized by an investment since the first trading day of the current calendar year.
  • YTD return is a commonly used number for the comparison of assets or for tracking portfolio performance.
  • To calculate YTD, subtract the starting year value from the current value, divide the result by the starting-year value; multiply by 100 to convert to a percentage.
  • Although year-to-date (YTD) return on a portfolio is helpful, analyzing the three-year and five-year returns can provide a better sense of the trend.
  • The YTD return can be helpful when assessing the performance of a portfolio or security against others or a benchmark, such as the S&P 500 index.

What Is the Year-to-Date Return?

YTD return is the amount of profit (or loss) realized by an investment since the first trading day of the current calendar year. YTD calculations are commonly used by investors and analysts to assess the performance of a portfolio or to compare the recent performance of a number of stocks.

Comparing YTD Return

The YTD return can be helpful when assessing the performance of a portfolio or security against others or a benchmark.

For example, an equity portfolio that has generated a 5% return may appear by itself to be impressive. However, if an equity benchmark such as the S&P 500 index earned 10% YTD, the portfolio's 5% YTD return would be underperforming the overall market.

As a result, it helps to compare YTD returns to like assets, such as a bond portfolio to a bond fund. Also, some portfolios might be heavily invested in one sector, such as technology. To gauge performance, investors can compare their tech portfolio's YTD return to a technology exchange-traded fund (ETD).

Limitations of YTD Return

YTD measurement is important, but keep in mind that the information it conveys is limited and may place too much emphasis on short-term performance. Also, YTD return analysis may not account for the seasonality of revenue and earnings.

For example, the retail sector earns much of its revenue in Q4 during the holidays. Analyzing the YTD return of a retailer earlier in the year might appear that the company is underperforming versus non-retail companies. However, the retailer might outperform other companies by the end of the year if its holiday sales were significant.

Although YTD return analysis helps allow investors to pivot by adjusting their portfolio's asset allocation, it's also important to consider longer time frames. For example, analyzing three-year and five-year returns can help get past short-term trends to determine how a portfolio, stock, or index is performing over time.

YTD return can have the starting point at the beginning of the calendar year or fiscal year. While the calendar year starts on Jan. 1, a company's fiscal year is the start of the accounting year and can vary. For example, Apple's 2021 fiscal year ended on Sept. 25, 2021.

Calculating YTD Returns

Calculating the YTD return of an entire portfolio is the same as for a single investment. Below are the steps to calculate YTD return:

Step 1: Obtain the portfolio's current value and its beginning value at the start of the year.

Step 2: Subtract the portfolio's value at the start of the year, such as Jan. 1, from the portfolio's current value. The result is the YTD return in dollars.

Step 3: Divide the dollar value of the YTD return by the portfolio's beginning value.

Step 4: Multiply the result in step three by 100 to convert the decimal figure into a percentage.

The result is the percentage YTD return of a portfolio.

The year to date return formula is as follows: Year to date = ((Current value - Beginning value) / Beginning value) * 100

Example of YTD Return

Assume that on Jan. 1 of this year a stock portfolio had a value of $50,000 that consisted of three stocks listed below:

  • Stock A: $10,000
  • Stock B: $15,000
  • Stock C: $25,000

Portfolio value: $50,000 at the start of the year

On June 30th, a YTD return analysis was performed to determine how the equity portfolio was performing at the year's halfway mark.

  • Stock A: $13,000
  • Stock B: $18,000
  • Stock C: $24,000

Portfolio value: $55,000 on June 30

Portfolio's YTD Return: ($55,000 - $50,000) / $50,000 = .010 * 100 = 10%

The YTD return in dollars was $5,000 (or $55,000 - $50,000) and represented as a percentage was a 10% return YTD.

It's important to note that portfolio weighting must also be considered when investing. For example, if a portfolio has more than 50% of its money invested in one stock or sector, the portfolio's return will likely be impacted more so by the higher-weighted holdings versus the lower-weighted holdings.

Factoring in Interest and Dividends

If an investment paid interest or dividends during the year, the amount must be included in the current value of the portfolio since it counts as a portion of the gain. The YTD return would then be calculated as follows:

  • Portfolio YTD Return: ($55,500 - $50,000) / $50,000 = .011 * 100 = 11%

As we can see, if a stock or investment pays a dividend or interest, it can help bolster a portfolio's YTD return.

What Is Considered a Good YTD Rate of Return?

A good rate of return depends on how a portfolio compares to a similar benchmark. For example, a stock portfolio's YTD return might be impressive compared to a bond fund, but it's more helpful to compare it to an equity benchmark like the S&P 500.

What Does a High YTD Mean?

A high YTD return means that the portfolio is generating an increase in value when compared to the start of the year.

What Are the Limitations of Using a YTD Return?

Limitations to YTD return analysis include the seasonality of earnings. For example, retail companies that earn much of their revenue in Q4 during the holidays might have an underperforming YTD return in June but outperform by the end of the year.

Article Sources
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  1. Apple Investor Relations. "Securities and Exchange Commission Form 10-K, Annual Report for the Fiscal Year Ended September 25, 2021, Apple Inc.," Page 1.

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