Holding period return

In finance, holding period return (HPR) is the total return on an asset or portfolio over the period during which it was held. It is one of the simplest measures of investment performance.

HPR is the percentage by which the value of a portfolio (or asset) has grown for a particular period. It is the sum of income and capital gains divided by the initial period value (asset value at the beginning of the period).

HPR = ((Present Value, or face Value, End-Of-Period Value) + (Any Intermediate Gains eg. Dividends) - (Initial Value)) /(Initial Value)

$HPR_{n}\ =\ {\frac {Income+(P_{n+1}-P_{n})}{P_{n}}}$

Example

Example: Stock with low volatility and a regular quarterly dividend

End of:	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Dividend	$1	$1	$1	$1
Stock Price	$98	$101	$102	$99
Quarterly ROI	-1%	4.08%	1.98%	-1.96%
Annual ROI				3%

To the right is an example of a stock investment of one share purchased at the beginning of the year for $100. At the end of the first quarter the stock price is $98. This is a capital loss. The stock share bought for $100 can only be sold for $98, which is the value of the investment at the end of the first quarter. The first quarter return is:

($98 – $100 + $1) / $100 = -1%

Since the final stock price is $99, the annual ROI is:

($99 ending price - $100 beginning price + $4 dividends) / $100 beginning price = 3% ROI.

If the final stock price had been $95, the annual ROI would be:

($95 ending price - $100 beginning price + $4 dividends) / $100 beginning price = -1% ROI.

Annualizing the holding period return

Over multiple kkj

To annualize a holding period return (translate it into percentage per year), then

Annualized HPR = (((Present Value, or face Value, End-Of-Period Value) + (Any Intermediate Gains eg. Dividends) - (Initial Value)) /(Initial Value)) + 1 ) ^ ( 1 / (Years) ) - 1

$AnnualizedH\!P\!R_{n}=(([D_{1}+(P_{n+1}-P_{n})]/P_{n})+1)^{\,\!1/Years}-1$

Years being number of years that have passed. For example, if you have held the item for half a year, year would equal 1/2.

From quarterly holding period returns

To calculate an annual HPR from four quarterly HPRs:

If HPR1 through HPR4 are the holding period returns for four consecutive periods, the annual HPR is calculated as follows:

(1 + HPR)= (1 + HPR1)(1 + HPR2)(1 + HPR3)(1 + HPR4)