To calculate the year-to-date (YTD) return on a portfolio, subtract the starting value from the current value and divide 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.
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.
Using the YTD period sets a common time frame for assessing the performance of securities against each other and against their benchmarks. It also is useful for measuring price movements relative to other data, such as the economic indicators.
Look Longer-Term, Too
YTD measurement is important, but keep in mind that the information it conveys is limited. Most investors and analysts also look at longer time periods, such as three-year and five-year returns, to get past short-term trends and see how a portfolio, a stock, or an index is performing over time.
- YTD return is a commonly used number for comparison of assets or for tracking portfolio performance.
- To calculate YTD, subtract its value on January 1st from its current value. Divide the difference by the value on January 1st. Multiply the result by 100 to convert the figure to a percentage.
- YTD is always of interest, but three-year and five-year returns tell you more.
Calculating Year-To-Date Returns
Calculating the YTD return of an entire portfolio is the same as for a single investment. Take the current value of all assets in the portfolio and subtract the total amount invested on the preceding January 1st. This renders the total YTD return in dollars.
Dividing this figure by the original value and multiplying by 100 converts the figure into a percentage that represents the return generated by each dollar originally invested.
Example of YTD Return
Assume that on January 1st of last year you invested a total of $50,000 in three assets. On December 31st, the portfolio was comprised of the same three assets, then valued at $10,000, $15,000, and $35,000. The YTD return in dollars is $60,000 - $50,000 plus $10,000.
The YTD return percentage therefore is 20%, or $10,000 / $50,000 * 100.
Over the past year, each dollar you invested produced 20 cents of profit.
Factoring in Interest and Dividends
If your investment paid interest or dividends during the year, this amount must be included in the current value of the portfolio since it counts as profit.
Assume the assets in the example above also paid annual dividends totaling $500. The YTD return is then 21%, or ([$60,000 + $500] - $50,000) / $50,000 * 100. Though the value of the portfolio has not changed, its YTD return is higher because it generated income through dividends as well as capital gains.