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. Multiplying by 100 converts this figure into a return percentage, which is more useful than the decimal format in comparing the returns of different investments.
What Is the Year-To-Date Return?
YTD return is simply the amount of profit generated by an investment since the beginning of the current calendar year. YTD calculations are commonly used by investors and analysts in the assessment of portfolio performances?because of their simplicity.
Calculating Year-To-Date Returns
Calculating the YTD return of a 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 Jan. 1. 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 reflects the return generated by each dollar originally invested.
Assume that on Jan. 1 of the current year you invested a total of $50,000 in three different assets. On Dec. 31, this portfolio is comprised of the same three assets valued at $10,000, $15,000, and $35,000, respectively. The YTD return in dollars is simply $60,000 - $50,000 plus $10,000. The YTD return percentage is?20%, or $10,000 / $50,000 * 100. This means that over the past year, each dollar you invested in January produced another 20 cents of profits.
If your investment paid interest or dividends throughout the year, this amount must be included in the current value of the portfolio since it counts as profit. Assume the portfolio 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.