1. What is Portfolio Return?

Portfolio return is the weighted average of the returns of individual assets in a portfolio. It represents the overall performance of the investment portfolio based on the proportion of each asset's investment and its respective return.

2. How Does the Calculator Work?

The calculator uses the portfolio return formula:

Where:

• \( Weight_i \) — The proportion of the portfolio invested in asset i (as decimal)
• \( Return_i \) — The return of asset i (as percentage)

Explanation: The formula calculates the overall return by summing the products of each asset's weight and its corresponding return.

3. Importance of Portfolio Return Calculation

Details: Calculating portfolio return is essential for evaluating investment performance, comparing different investment strategies, and making informed decisions about asset allocation and portfolio rebalancing.

4. Using the Calculator

Tips: Enter weights as decimals (e.g., 0.25, 0.35, 0.40) and returns as percentages (e.g., 8, 12, 6). Separate values with commas. The sum of weights should equal 1.0.

5. Frequently Asked Questions (FAQ)

Q1: Why is portfolio return calculation important?
A: It helps investors understand the overall performance of their investment portfolio and make informed decisions about asset allocation.

Q2: What if the sum of weights is not equal to 1?
A: The calculation assumes weights sum to 1. If they don't, the result may not accurately represent the portfolio's true return.

Q3: Can I use this for any number of assets?
A: Yes, the formula works for any number of assets as long as weights and returns arrays have the same length.

Q4: How often should I calculate portfolio return?
A: Regular calculation (monthly or quarterly) helps track performance and make timely investment decisions.

Q5: Does this account for fees and taxes?
A: No, this calculates gross return. For net return, you would need to subtract fees and taxes from the calculated value.