Annualized return

An annualized return converts a result achieved over a period into the constant yearly rate that would have produced it through compounding. A portfolio that grew by sixty percent over four years annualizes to about twelve and a half percent a year, because that rate compounded four times reaches the same place. It is a restatement of one number, not new information, and the arithmetic is multiplicative rather than a division by the number of years.

Why it matters

Without it, results over different lengths of time cannot be laid beside each other at all: twenty percent over eighteen months and twenty-eight percent over three years are not comparable as they stand. What the single rate hides is every year that made it up. A portfolio that gained forty percent, lost twenty and gained thirty annualizes to a calm-looking figure that describes none of those years, which is why an annualized number is normally read together with something that shows the route, such as a chart or a drawdown.

How BullBenchmark shows it

We report your return over the period your money was actually invested, computed from your own deposits and trades rather than from a calendar year we chose for you. The same period is used for the index lines, so the comparison covers identical days on both sides, and time travel rebuilds all of it for any earlier date. The period-based figures are on the demo dashboard.

Related terms

Time-weighted return (TWR) · Drawdown · XIRR

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