Holding period return

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In finance, holding period return (HPR) is a measurement of return on an asset or portfolio. 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 net 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)

[edit] Annualizing the holding period return

[edit] Over multiple years

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. Dividents) - (Initial Value)) /(Initial Value)) + 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.

[edit] 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)