Mutual Fund Compare

Rolling returns explained: a better way to judge mutual funds

Written and reviewed by Omm · Last reviewed · General information, not investment advice

A fund’s 5-year return is a single number from one start date to one end date. If the start date happened to be right before a crash, the number looks bad; if it was right after, it looks great. Rolling returns remove that luck.

How they work

Pick a holding period, for example 1 year. Take every trading day as a start date, compute the return from that day to one year later, and move forward one day at a time. You end up with thousands of overlapping 1-year returns. Summarise them with:

  • Average: the typical outcome.
  • Worst (minimum): the worst result an investor with that holding period actually got.
  • Positive windows: the share of windows that ended in a gain.

Each fund page on this site shows these for 1-year windows, and the 3-year average and worst. For windows of 12 months or more the return is shown as CAGR. See CAGR vs XIRR vs absolute return.

Reading them

Two funds can have the same 5-year return and very different rolling returns. One may have delivered 12% almost every time; another may have swung between −10% and +30%. The steadier fund gave investors fewer unpleasant surprises, which matters if you may need to sell at an unlucky moment.

A high average with a very poor worst case tells you the fund can fall hard. A modest average with a high share of positive windows tells you it was consistent. Neither is better in itself; they suit different tolerance for risk. Combine them with the risk measures.

Limits

  • Windows overlap heavily, so they are not independent observations. Ten years of data does not give thousands of separate results.
  • A fund with a short history has few windows, so its figures are less reliable. Funds younger than the window show no figure at all.
  • They describe the past. A fund can change manager, size or strategy.

Compare rolling returns only between funds in the same category over the same window, and look at them alongside returns, risk and cost.

Frequently asked questions

What are rolling returns?

Rolling returns are returns over a fixed-length window, such as 3 years, calculated for every possible start date and then summarised, for example by the average, the worst and the best.

Why are rolling returns better than point-to-point returns?

A point-to-point return depends entirely on the two dates chosen. A fund can look excellent from one start date and poor from another. Rolling returns show the whole range of outcomes an investor could have had.

What does '% positive windows' mean?

It is the share of all the rolling windows in which the fund ended with a positive return. A higher share means investors lost money less often over that holding period.

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