Loans
Cards
Insurance
Investment
Stock Market
Electronics Mall
CIBIL Score
Knowledge Centre
Calculators
Do not call
En
Rolling returns are a method used to evaluate the performance of an investment by calculating average returns over multiple overlapping intervals. This approach helps reduce biases that may result from choosing specific start and end dates, offering a more consistent and comprehensive assessment of fund performance over time. Investors commonly use rolling returns to understand how consistently a mutual fund or asset class has delivered returns across different market cycles.
Rolling returns represent the average annualised return of an investment over a specific period, calculated continuously over a set timeframe. Unlike point-to-point returns, which measure performance between two fixed dates, rolling returns evaluate consistency by assessing returns at regular intervals.
Rolling returns help investors understand how an asset has performed across different market periods. For example, a 3-year rolling return shows how the investment performed across every 3-year interval in the chosen duration. This method smooths out short-term volatility, offering a more reliable view of historical performance compared to single-date comparisons.
Rolling returns serve several purposes for long-term investors:
Help measure consistency of performance over time
Reduce bias caused by selecting specific start and end dates
Offer a clearer picture of how a fund has managed different market conditions
Enable effective comparison between mutual fund schemes
By analysing returns across different rolling windows, investors can identify whether a fund’s performance is driven by a few strong periods or is consistently maintained.
To calculate rolling returns:
Choose a time period (e.g., 3 years).
Select a frequency (daily, weekly, monthly).
Use the formula:
Rolling Return = [(Ending NAV / Beginning NAV)^(1/n)] – 1,
where n is the number of years in the rolling period.
Repeat this calculation for each period within the chosen timeframe. For example, to compute 3-year rolling returns over 10 years using monthly intervals, calculate the return for every 3-year period starting from each month.
Rolling return calculators help automate this process using inputs such as:
Start and end dates
NAV data
Rolling period (e.g., 1Y, 3Y, 5Y)
Investors can use these tools available on mutual fund platforms or data providers to compare funds and interpret historical trends without manual calculations.
Understanding rolling returns involves assessing the distribution of returns over a timeline:
1-Year Rolling Returns: Indicate short-term consistency and volatility
3-Year Rolling Returns: Capture medium-term stability and fund manager performance
5-Year Rolling Returns: Reflect long-term reliability and risk-adjusted returns
Higher average returns with lower standard deviation suggest consistent and stable performance.
Consider the following table:
| Basis | Rolling Returns | CAGR (Compound Annual Growth Rate) |
|---|---|---|
Nature |
Measures multiple overlapping intervals |
Measures one fixed interval |
Volatility Adjustment |
Smoother, accounts for market fluctuations |
Can be distorted by start/end date selection |
Use Case |
Appropriate for consistency analysis |
Appropriate for single-period absolute performance |
Example |
3Y rolling returns over 10 years |
Return from Jan 2013 to Jan 2023 |
Rolling returns are widely used in mutual fund analysis for:
Comparing funds with similar objectives over a period
Evaluating fund manager performance consistency
Assessing volatility and resilience during market highs and lows
Conducting long-term strategy backtesting
This method enables effective fund selection by filtering out short-term anomalies.
Despite their usefulness, rolling returns have some limitations:
Data-Intensive: Require historical NAV data for accuracy
Time Consuming: Manual calculation can be complex without tools
Not Predictive: Past consistency does not guarantee future performance
Dependent on Frequency: Monthly, daily, or weekly intervals may lead to different outcomes
Investors should use rolling returns as one of many tools in evaluating investments.
Rolling returns provide a comprehensive lens to evaluate investment performance across various market cycles. They reduce selection bias and highlight the consistency of returns, offering investors a deeper understanding than traditional point-to-point metrics. When combined with other indicators, they can enhance long-term investment analysis without implying future returns.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
Rolling return refers to the average return earned by an investment over a fixed period, evaluated repeatedly at regular intervals to check for consistency.
Rolling returns consider multiple overlapping timeframes to show performance consistency, whereas CAGR shows the average annual return between two fixed points in time.
A rolling return calculator processes NAV or price data over the selected interval and calculates the annualised return for each period. It provides a summary of consistency and trends over time.
.jpeg)
34541
Navigate the tax maze with ease! Uncover Income Tax 101, demystify jargon with Terms for Beginners, and choose between Old or New Regimes.
65485
Unlock the world of credit! From picking the perfect card to savvy loan management, navigate wisely.
43108
Money Management and Financial Planning covers personal finance basics, setting goals, budgeting...
19039
Explore the investment cosmos! From beginner's guides to sharp-witted strategies, explore India's treasure trove of options.
3247
Discover essential insights on various types of insurance in India.
4386
Welcome to Tech in Finance, where we explore the exciting intersection of technology and finance...
Personal Loan, Business Loan, Collateral
Fixed Deposit, Mutual Fund, NPS, Demat A/C, SGB
General Insurance, Life Insurance, Term Insurance
Stocks, IPOs
Credit Score, Report & Analysis
Smart Phone, Speaker, EarPhone
Academy 
.jpeg "image not found")
