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How to calculate Portfolio return

The Portfolio return formula, with plain worked examples you can check yourself.

Portfolio return = w × Ra + (1 − w) × Rb

The result is a percentage (%).

Worked examples

w = 60% · Ra = 8% · Rb = 4%Portfolio return = 6.4%
w = 50% · Ra = 8% · Rb = 2%Portfolio return = 5%
w = 80% · Ra = 12% · Rb = 2%Portfolio return = 10%

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Investing & Returns.

Related terms

PortfolioDividendBondHedgingArbitrageLeverage

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