Holding period return

In finance, holding period return (HPR) is the total return on an asset or portfolio over a period during which it was held. It is one of the simplest and most important measures of investment performance.

HPR is the change in value of an investment, asset or portfolio over a particular period. It is the entire gain or loss, which is the sum income and capital gains, divided by the value at the beginning of the period.

where the End Value includes income, such as dividends, earned on the investment:

where ${\displaystyle P_{n}}$ is the value at the start of the holding period and ${\displaystyle Income+P_{n+1}}$ is the total value at the end of the holding period.

To annualize a holding period return means to find the equivalent rate of return per year. Assuming income and capital gains and losses are reinvested, i.e. retained in the portfolio, then:

t being the length of the holding period, measured in years. For example, if you have held the item for half a year, t would equal 1/2, so 1/t would equal 2. (However, investment performance professionals generally advise against quoting annualized return over a holding period of less than a year).

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