Portfolio Return Calculator UK

How Portfolio Return Is Calculated

A portfolio's return is not a simple average of its holdings' returns. Each holding contributes in proportion to its weight, so:

A worked example: a £20,000 portfolio holds £10,000 in a global fund (up 8%), £6,000 in a UK fund (up 3%), and £4,000 in bonds (up 1%). The weights are 50%, 30%, and 20%, so the portfolio return is (0.5 × 8) + (0.3 × 3) + (0.2 × 1) = 5.1%. The simple average of 4% would be wrong because half the money sits in the best performer.

The same weighting logic explains why one large losing position can drag down a portfolio full of small winners. You can check how individual transaction fees alter these returns using our Share Dealing Fee Calculator.

The Deposits Problem: Why Your Platform Percentage Misleads

If you added or withdrew money during the period, a naive "end value ÷ start value" calculation is distorted. Start with £10,000, add £5,000 mid-year, and finish at £16,000: you have not made 60%, because £5,000 of the rise was your own deposit.

Two proper methods exist. Time-weighted return strips out the effect of your deposits entirely and measures how well the investments themselves performed, which makes it the right measure for judging a fund or comparing against an index. Money-weighted return includes the timing of your cash flows and measures how well your actual pounds did, which reflects your personal experience including any lucky or unlucky timing. UK platforms display one or the other and rarely explain which, so check before comparing numbers between accounts.

Annualising: Comparing Across Timeframes

A 20% return over 3 years and a 12% return over 18 months cannot be compared directly. Convert both to a compound annual growth rate:

£10,000 growing to £12,000 over 3 years is (1.2)^(1/3) − 1 = 6.3% a year. Note this is below the naive 20 ÷ 3 = 6.7% because compounding does part of the work. Never annualise periods under a year, since multiplying a lucky quarter by four produces a meaningless figure. You can project future growth trajectories using our Investment Growth Calculator.

Judging the Number: Benchmarks and Costs

A return only means something against a fair comparison. A UK-heavy portfolio belongs against the FTSE All Share index, a global one against a global index, and always on a total return basis with dividends included. Two honesty checks: measure after all fees, since a 6% return with 1% costs is a 5% reality, and measure over rolling multi-year periods rather than a single flattering window.

If your weights have drifted far from your plan (equities ballooning after a strong run), the same maths that computes your return also tells you what to trim and top up when rebalancing. You can also view how taxes affect your stock sale gains using our Capital Gains Tax Calculator or dividend income using our Dividend Tax Calculator.