How to calculate YTD annualization

Written by timothy banas
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How to calculate YTD annualization
Year-to-date annualization is easy to calculate. (money image by Valentin Mosichev from

According to, to annualise means to convert a rate of any length into a rate that reflects the rate on an annual (yearly) basis. Financial analysts usually perform annualization calculations on investment returns that have been accruing for less than a year. These are called year-to-date (YTD) annualizations and their purpose is to estimate the total return for the year. For instance, if an investment has returned 7 per cent in seven months, that is 1 per cent per month. Based on that rate, the YTD annualization would be 12 per cent. Calculating YTD annualization can be done using a simple formula.

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  1. 1

    Write this equation for the YTD return on your investment:

    YTD Return = ((Investment Value - Initial Investment) / Initial Investment) x 100 per cent

  2. 2

    Analyse your investment to determine the appropriate values, then calculate the YTD return. For example, consider an initial investment of £9,750 that has increased in value to £10,725.

    YTD Return = (($16,500 - £9,750) / £9,750) x 100 per cent = 10 per cent YTD return.

  3. 3

    Write this equation for annualising the return:

    Annualised Return = (YTD Return / Number of Months Invested) x 12

  4. 4

    Determine the number of months your investment has been active and plug the numbers into the annualised return equation. For example, consider that the above investment has existed for eight months.

    Annualised Return = (10 per cent / 8) x 12 = 15 per cent

    Based on the YTD performance, you would expect a annual return on the investment of 15 per cent.

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