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What is the Holding Period Return?

The Holding Period Rerevolve (HPR) is the total rerotate on an assetTypes of AssetsCommon kinds of assets incorporate current, non-present, physical, intangible, operating, and non-operating. Correctly identifying and or investment portfolio over the period for which the ascollection or portfolio has been organized. The holding period return deserve to be realized if the asset or portfolio has actually been hosted, or supposed if an investor just anticipates the purchase of the ascollection.

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Typically, the HPR is expressed in percenteras. Frequently, it is annualized to recognize the price of returnRate of ReturnThe Rate of Rerotate (ROR) is the gain or loss of an investment over a period of time copmared to the initial cost of the investment expressed as a percent. This guide teaches the the majority of prevalent formulas per year.

The Holding Period Rerevolve in Investment Management

The holding duration rerevolve is a fundamental metric in investment administration. The meacertain offers a comprehensive view of the financial performance of an ascollection or investment bereason it considers the appreciation of the investment, as well as the earnings distributions related to the ascollection (e.g., dividendsDividendA dividend is a share of profits and also preserved revenue that a agency pays out to its shareholders. When a company geneprices a profit and accumulates maintained income, those revenue deserve to be either reinvested in the business or passist out to shareholders as a dividfinish. paid).

The HPR can be used to compare the performance of different investments or assets. In addition, this metric is used to identify the correct tax price.

Formula for Calculating the Return

The general formula for calculating the HPR is:



Income – the distributions or cash flows from the investment (e.g., dividends)Vn – the ending value of the investmentV0– the start value of the investment

If you must calculate the annualized HPR, you can usage the adhering to formula:


Finally, the returns deserve to be calculated quarterly. Using the formula listed below, you have the right to analyze the quarterly HPR into the yearly HPR:



r1, r2, r3, r4– the quarterly holding duration returns

Example of Holding Period Return

Three years ago, Fred invested $10,000 in the shares of ABC Corp. Each year, the firm spread dividends to its shareholders. Each year, Fred got $100 in dividends. Keep in mind that because Fred received $100 in dividends annually, his total revenue is $300. Today, Fred offered his shares for $12,000, and also he desires to recognize the HPR of his investment.

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Using the HPR formula, we deserve to find the following:


Hence, Fred’s investment in the shares of ABC Corp. earned 23% for the whole duration of holding the investment.

More Resources

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