Portfolio Return Calculator
Calculate weighted portfolio return across multiple assets — see each holding's contribution to total performance.
Asset Allocations & Returns
Weighted Portfolio Return
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blended return across all assets
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Total Allocation
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Best Performer
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Lowest Return Asset
Per-Asset Return Contribution
| Asset | Weight | Return | Contribution | Share of Return |
|---|---|---|---|---|
| Portfolio | — | — |
Calculation Details
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How to use this calculator
Enter up to 4 assets with their allocation percentage and return percentage for each. Assets don’t need to sum to exactly 100%; the calculator normalizes automatically.
The calculator computes the weighted average portfolio return: the blended return based on how much of your money is in each asset and how that asset performed.
60/40 portfolio example:
- Asset 1: 60% allocation, 11% return (US equity)
- Asset 2: 30% allocation, 4% return (bonds)
- Asset 3: 10% allocation, 6% return (REITs)
- Asset 4: 0%
Portfolio return = (60 × 11% + 30 × 4% + 10 × 6%) / 100 = 8.4%
A simple average of the three returns would be 7%, which is wrong. The weighted answer (8.4%) is correct because US equity gets 60% of the weight.
Why weighted average matters
A simple average treats all assets equally. But if 80% of your money is in one asset and 5% is in each of four others, those four small positions barely affect your overall return.
Illustration: How weight changes the outcome
A hedge fund holds:
- 10% in a position that returned +200%
- 90% in positions that returned +4%
Simple average: (200% + 4%) / 2 = 102%, which is absurd and misleading Weighted average: (10% × 200%) + (90% × 4%) = 20% + 3.6% = 23.6%, the real result
This is why fund managers report weighted returns, not simple averages.
Portfolio return benchmarks by allocation
Historical approximate annual returns by portfolio type (nominal, based on U.S. market data):
| Portfolio Type | Allocation | Approx. Annual Return | Approx. Volatility |
|---|---|---|---|
| Ultra-conservative | 20/80 equity/bonds | 4–5% | 5–7% |
| Conservative | 40/60 equity/bonds | 5–7% | 7–9% |
| Moderate (Balanced) | 60/40 equity/bonds | 7–8% | 10–12% |
| Growth | 80/20 equity/bonds | 8–10% | 13–15% |
| Aggressive | 100% equity | 9–11% | 15–18% |
| All-World Equity | 70/30 US/international | 8–10% | 14–17% |
These are long-run estimates. Any single year can diverge dramatically. The balanced 60/40 portfolio experienced negative returns in 2022 for the first time in decades, a reminder that allocations are long-run, not short-run guarantees.
A portfolio return is only meaningful over long periods. Short-term return comparisons favor whatever happened to be lucky in that period. Judge a portfolio by its risk-adjusted return (Sharpe ratio) and long-run CAGR, not its last 12-month performance.
Asset class correlations and why they matter
Combining assets with low or negative correlation reduces portfolio volatility without proportionally reducing expected return. This is diversification’s free lunch.
| Asset Pair | Approximate Correlation |
|---|---|
| US large-cap / US small-cap | 0.80 |
| US equity / International equity | 0.75 |
| US equity / Bonds | −0.10 to +0.30 (varies) |
| US equity / Gold | −0.05 to +0.10 |
| US equity / REITs | 0.60–0.75 |
| US equity / Cash | ~0.00 |
| Bonds / Gold | 0.15–0.30 |
When correlations are low, combining assets reduces overall portfolio volatility below the weighted average of individual volatilities. A 60/40 equity-bond portfolio historically has lower volatility than 60% of equity volatility + 40% of bond volatility, because when stocks fall, bonds often rise (negative correlation).
The equity-bond negative correlation that held from 1997–2020 broke down in 2022 when both fell simultaneously due to rising interest rates. It’s not a law of nature; it’s a conditional relationship that depends on the inflation and growth environment.
Portfolio drift and rebalancing
As assets grow at different rates, the actual allocation drifts from the target. A 60/40 portfolio after a strong equity year may drift to 70/30 or higher.
Effect of drift: $100,000 in a 60/40 portfolio over 3 years:
After strong equity, weak bond years:
- Equity (originally $60,000 at 15%/yr for 3 years): $91,280, which is now 66% of the portfolio
- Bonds (originally $40,000 at 2%/yr for 3 years): $42,448, which is now 34% of the portfolio
The portfolio return calculation changes when the weights drift. Rebalancing back to 60/40 at year-end captures equity gains (sells high) and reinvests in bonds (buys relatively low).
Rebalancing frequency: Annual rebalancing is the academic and practical standard. More frequent rebalancing adds transaction costs and taxes without proportional benefit in most market environments.
Time-weighted vs. money-weighted portfolio return
Time-weighted return (TWR) is the fund’s performance independent of when you invested. It is the standard for evaluating fund managers because it eliminates the effect of your timing.
Money-weighted return (MWR / IRR) reflects your personal experience, accounting for when you added or withdrew money. It answers: “How did my portfolio actually do for me?”
| Scenario | TWR | MWR | Winner |
|---|---|---|---|
| Added money before a big gain | Same | Higher | MWR |
| Added money before a big loss | Same | Lower | TWR |
| No external cash flows | Same | Same | Tied |
This calculator computes the equivalent of a TWR for a static snapshot in time, useful for planning and benchmarking, not for personal return attribution across contributions.
The bottom line
Portfolio return is the weighted sum of all asset returns. To manage it:
- Know your actual allocations: account for all assets including cash, bonds, and alternative holdings
- Compare against a benchmark: a passive 60/40 index is the minimum bar for a balanced portfolio
- Rebalance annually: drift control is the simplest long-run return enhancer
- Combine with beta and Sharpe ratio: return alone does not tell you whether the risk was worth it
For measuring the risk taken to achieve this return, see the Sharpe Ratio Calculator and Portfolio Beta Calculator.
Frequently Asked Questions
What is a weighted portfolio return?
It is the blended return of a portfolio considering how much of the total investment is in each holding. An asset with a 50% allocation contributes twice as much to total return as one with a 25% allocation.
What if my allocations don't add up to 100%?
The calculator normalizes to whatever total you enter. If allocations add up to 80%, it assumes that accounts for the whole portfolio and computes weighted return accordingly. For accurate results, make sure allocations sum to 100%.
How many assets can I include?
This calculator supports up to 4 asset classes. For more assets, group similar ones (e.g., combine small-cap and large-cap US equities into one "US Equity" row) and enter the blended return for the combined group.
What is a good portfolio return?
For a balanced portfolio (60% equity / 40% bonds), 6–8% annual return has been historically reasonable. For aggressive portfolios (80%+ equity), 8–10%. These are nominal, pre-tax returns.
How does diversification affect portfolio return?
Diversification does not guarantee a higher return — it smooths volatility. A concentrated portfolio can have higher or lower returns than a diversified one. The benefit is reducing variance (risk) for a given level of expected return.
Should I include cash in my portfolio return calculation?
Yes. If you hold a meaningful cash position in a money market or high-yield savings, include it as an asset class with its current yield (e.g., 4–5% in a high-rate environment). Cash drag is real — a 20% cash allocation meaningfully lowers portfolio return.
What is the difference between time-weighted and money-weighted return?
Time-weighted return (TWR) measures the fund's growth rate independently of cash flows — it is what benchmark comparisons use. Money-weighted return (MWR or IRR) reflects the investor's actual experience including timing of contributions. This calculator computes TWR-style weighted average.
Can I use this for a 60/40 portfolio?
Yes. Enter Asset 1: 60% allocation, expected equity return (e.g., 10%). Asset 2: 40% allocation, expected bond return (e.g., 4%). The weighted return will be (60×10% + 40×4%) / 100 = 7.6%.
How does portfolio return relate to risk?
Higher expected return typically comes with higher volatility. A portfolio of 100% small-cap stocks might expect 12% return with 20%+ annual swings. A 60/40 portfolio might expect 7% with 10–12% annual swings. Use the Sharpe Ratio to compare risk-adjusted returns.
What is the efficient frontier?
The efficient frontier is the set of portfolios that offer the highest expected return for a given level of risk. A portfolio on the frontier cannot improve return without increasing risk or improve risk without reducing return.
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