Fund of Funds Return Calculator
The formula
What the fund of funds return tells you
Exactly what fund of funds return earned: total return, the annualised CAGR that makes it comparable, and the split between price gain and income.
Calculation: Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1. Enter your inputs and every substitution is shown below the result.
Reading the result
Compare with the boring alternative over the same window — the verdict bands anchor to long-run market returns; income-heavy gains are usually steadier than price-only ones.
Rules of thumb: Long-run real equity return sits near 6–7 % nominal CAGR plus inflation; bonds run 2–4 points lower.
Limitations and best practice
Ignoring the timing of income (reinvested vs spent) can overstate a CAGR by a few tenths; dividends spent as cash belong outside the ending value.
This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Frequently asked questions
Why does CAGR differ from average yearly return?
Are taxes included?
Source & methodology
Time-weighted return arithmetic per CFA Institute conventions.
How Fund of Funds Return works — and what your result really means
You are comparing options that arrive in different shapes, and Fund of Funds Return is the level playing field that makes them comparable. Searchers land on a Fund of Funds Return page for three reasons — to plan, to compare options, and to check that somebody else’s arithmetic is honest. This tool serves all three, and everything after the calculator explains the model instead of hiding it.
In plain terms, Fund of Funds Return answers the question "Total return?". The measurement matters because it converts a situation that feels complicated — several inputs pulling in different directions — into a single number you can act on. Within Investing & Markets, Alternative Investments is the context where this figure is quoted most often, and professionals treat it as a first-pass screen rather than a verdict.
A calculation like this one is worth roughly as much as a careful sentence: it forces several vague considerations into one comparable quantity. Once Fund of Funds Return is on the table, the argument can stop being about impressions.
Nothing below is stock text pasted around a number: the worked example computes total return = -19.00% from this tool’s own defaults, and the sensitivity section ranks the inputs that move the result — Buy price / invested first, at ≈47.4 % of the headline for a ten-percent error either way in that input. Work down the page and by the end you could re-derive the result in a spreadsheet from memory.
How Fund of Funds Return is computed, line by line
Here is the complete model this tool runs — Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1 — with each input explained below. If a competitor’s page gives you a different answer from the same inputs, this is the text that settles which of you is right.
Buy price / invested ($) (example value 22,500) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. Keep every money input in the same currency; mixing systems quietly corrupts the comparison.
Sell price / value now ($) (example value 17,750) is a plain measured quantity — the unit shown in the label is the unit the formula expects. Keep every money input in the same currency; mixing systems quietly corrupts the comparison.
Holding period (years) (example value 8) is a measured number in the unit named by the label; the formula does not convert for you. Be precise about the boundary (exact date, start of month); time inputs decide the exponent in most formulas.
Income received over the hold ($) (example value 475) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. Use the figure exactly as the source document states it, not a rounded memory of it — an omitted line is the classic silent error.
A fully worked Fund of Funds Return example
Abstract formulas are hard to trust, so here is the complete substitution using the default inputs, written the way an examiner would want it. Starting figures: Buy price / invested ($), Sell price / value now ($), Holding period (years), Income received over the hold ($). The endpoint of that chain is -19.00% of total return, sitting in the “Negative over the hold — the annualised figure below sizes the bleed” band.
- Ending value incl. income = $17,750.00 + $475.00 = $18,225.00
- Total return = (18,225.00 − 22,500.00) ÷ 22,500.00 = -19.00 %
- CAGR = (18,225.00 ÷ 22,500.00)^(1/8.0) − 1 = -2.60 % a year
Annualised (CAGR) — -2.60%. This is the number experienced users quote when the headline alone would mislead.
Net profit — $-4,275.00. Read next to the headline, this is the figure that shows the shape of the trade-off.
Value multiple — 0.81 ×. Read next to the headline, this is the figure that shows the shape of the trade-off.
Income share of gain — 0.0%. Compare it against the main result of -19.00% before drawing conclusions.
Keep this worked example open while you enter your own figures: matching the shape of the substitution is the fastest way to spot a unit or convention mistake.
The Fund of Funds Return corridor: your result across a realistic band
Single-point answers invite false confidence, so the same engine was run across a band around the input that matters most here. Each row is a full recalculation of Fund of Funds Return, not an interpolation.
| Buy price / invested setting | Total return |
|---|---|
| 80 % of the example value | 1.25% |
| 90 % of the example value | -10.00% |
| example inputs | -19.00% |
| 110 % of the example value | -26.36% |
| 120 % of the example value | -32.50% |
Across 5 settings of Buy price / invested, the result spans -32.50% to 1.25%. A decision that only works at one row of this table is a decision waiting for an input to move. Reproduce it in the form above by editing Buy price / invested alone; the substitution steps will follow your figures exactly.
What actually moves your Fund of Funds Return
Generic advice says “it depends on your inputs”; this section says exactly how much. Each field was perturbed by ±10 % in isolation and the total return recomputed, so the ranking below is measured rather than asserted. It is the fastest honest answer to “what matters most in Fund of Funds Return?” — and it is specific to these defaults, because sensitivity moves with the starting point.
- Buy price / invested +10 % → Fund of Funds Return = -26.36% · −10 % → -10.00% (the total return shifts ≈47.4 %)
- Nudge Sell price / value now by ±10 % and Fund of Funds Return lands between -26.89% and -11.11% (sensitivity ≈41.5 %)
- Income received over the hold +10 % → Fund of Funds Return = -18.79% · −10 % → -19.21% (the total return shifts ≈1.1 %)
Buy price / invested is the dominant lever here: ten percent either way moves the result by about 47.4 %, from -26.36% to -10.00%. That is where a careless figure does the most damage, so check it against a source, and treat Sell price / value now as the second priority (≈41.5 % per ten percent). The rest of the inputs earn only a rounding-error of attention, and that asymmetry is the practical payoff of measuring rather than asserting.
What a Fund of Funds Return of -19.00% means in practice
Nobody acts on a bare figure — they act on a figure with a comparison attached. The verdict attached to the default calculation — “Negative over the hold — the annualised figure below sizes the bleed” — is one band on a ladder your own figure may sit somewhere else on. Before treating the band as fact, note its width: ten percent either way on Buy price / invested already spans -26.36% to -10.00%. The practical reading rules: read the band as a starting hypothesis, then test it: change the two dominant inputs by ten percent and see whether the verdict survives. Verdicts that survive stress are the ones worth acting on.
Set Fund of Funds Return beside its neighbours and it usually plays a specific role: this figure establishes the size of something, and the neighbouring tools establish whether that size is acceptable. Skipping the first step makes the second one arbitrary.
Why Fund of Funds Return results go wrong — and how to prevent it
Ignoring the timing of income (reinvested vs spent) can overstate a CAGR by a few tenths; dividends spent as cash belong outside the ending value. This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Chasing precision in Sell price / value now ($) while Buy price / invested ($) is still a guess. The sensitivity ranking above shows exactly where the accuracy budget should go.
This model has its own particular trap: Buy price / invested carries ≈47.4 % of the response per ten percent of error, so effort spent elsewhere is largely decorative.
Another is comparing across contexts: a Fund of Funds Return computed with one set of conventions should never be lined up against a figure computed with another. Check the inputs behind both before ranking them.
Before you trust your Fund of Funds Return: a short checklist
- Verify each input against its original source document, not memory.
- Check that every field the formula needs actually arrived from a document, not from recollection.
- Put Buy price / invested under a magnifier; the sensitivity table above is the reason why.
- Re-run the calculation with a ±10 % stress on the two most sensitive inputs.
- Recompute once with the dominant input deliberately set low, and see whether the decision changes.
- Confirm the answer against one independent method or published benchmark for Fund of Funds Return.
Step by step: getting a trustworthy Fund of Funds Return out of this tool
The tool does the arithmetic; the routine below is what makes the arithmetic trustworthy. Five steps, a minute total — and afterwards you will know not just what the number is, but which assumption produced it.
Step 1 — start from evidence. The inputs behind Fund of Funds Return are buy price / invested ($), sell price / value now ($), holding period (years), income received over the hold ($). Write them down with their source next to each one; if you cannot name where a figure came from, that is the input most likely to be wrong. A result worth acting on survives having its two shakiest inputs halved.
Step 2 — start from the case you can defend. Enter pessimistic-but-honest figures first; the optimistic run is a ceiling, not a plan. A conclusion that holds on conservative inputs holds everywhere. Note the assumption you are least sure about; that is where the real risk lives.
Step 3 — change one input at a time. Nudge a single field by ten percent, watch the headline and its companions move, then undo it. Two or three fields will dominate — the sensitivity table above already ranks them for this engine. When two sources disagree, it is almost never the arithmetic that differs.
Step 4 — ask what would have to be true. Take the result you want and work backwards through the inputs until you find the assumption that produces it; then decide honestly whether that assumption is defensible. Most surprises in numbers are surprises about inputs, not about formulas.
Step 5 — record the context, not just the number. Note today’s date and the inputs alongside the -19.00% output. Six months from now the context is what turns this figure into a trend. Note the assumption you are least sure about; that is where the real risk lives.
Who actually uses Fund of Funds Return — and when
Most Alternative Investments disagreements are arithmetic disagreements in disguise. When Total return of -19.00% sits on the table with its working shown, the conversation stops being about who sounds more confident and starts being about which input is wrong. Say the answer out loud before you save it; if it sounds wrong, the model did not change, your understanding did.
The companion outputs — Annualised (CAGR) and Net profit — exist for the second stage of that screen: the headline sizes the prize, while the companions describe the trade-off you are accepting to get it. One decimal place more than your data supports is one decimal place of fiction.
Re-running this page costs nothing and catches the slow drifts that never announce themselves. In Investing & Markets the expensive mistakes are rarely sudden; they are small changes in Buy price / invested ($) that nobody recalculated for a year. Precision is a promise you make about your data; make sure your inputs can keep it.
Fund of Funds Return — frequently asked questions
What affects Fund of Funds Return the most?
The short answer: Buy price / invested. The longer answer is the sensitivity table on this page, where every numeric input was probed by ten percent and the total return recalculated — Buy price / invested moved it furthest, by roughly 47.4 % (-26.36% to -10.00%).
Which matters more: sell price / value now or buy price / invested?
For Fund of Funds Return, Buy price / invested wins the head-to-head (≈47.4 % against ≈41.5 % per ten-percent change). Knowing which input dominates is the difference between careful work and merely slow work.
What is a typical Fund of Funds Return?
With the example inputs on this page the result is -19.00%, labelled “Negative over the hold — the annualised figure below sizes the bleed”. “Typical” varies with situation, which is why every result here ships with its verdict band and its sensitivity list: they turn one figure into a range you can locate yourself inside.
How do I calculate Fund of Funds Return by hand?
Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1 is the entire method. Work the inputs in that order — Ending value incl. income = $17,750.00 + $475.00 = $18,225.00 — and you will reach -19.00% on the default figures, the same number this tool prints.
What happens to Fund of Funds Return if buy price / invested changes by 10 %?
Try it in the form above and the printed substitution will follow you; the pre-computed answer for the defaults is -26.36% to -10.00% across the ten-percent probe, i.e. ≈47.4 % sensitivity on the total return.
Is the Fund of Funds Return result of -19.00% good or bad?
The tool answers “what”, not “whether”: -19.00% carries the verdict “Negative over the hold — the annualised figure below sizes the bleed” for the default case, which is a starting interpretation rather than a verdict on your situation. Re-run with your own figures and compare the bands.
Can Fund of Funds Return be negative or empty?
Yes, and that is informative rather than broken: a negative Fund of Funds Return usually means the inputs encode an outflow or a shortfall, and the verdict band above labels exactly that situation instead of hiding it.
Can I predict future returns with Fund of Funds Return?
No tool predicts; Fund of Funds Return computes implications. Use it to ask "if these inputs hold, what follows" — then stress the assumptions.
Why does CAGR differ from average yearly return?
CAGR compounds — it is the single steady rate that turns the start into the end, while arithmetic averages flatter volatile paths.
Are taxes included?
No, this is the pre-tax picture; subtract tax drag on gains and income before comparing with a tax-sheltered alternative.
Is my data private on this page?
Yes — computation happens locally in your browser, with no account, no tracking of your inputs and nothing sent to a server. The printed formula is the whole story of what happens to your figures.
The vocabulary of Fund of Funds Return
- Annualised (CAGR)
- -2.60% in the default Fund of Funds Return calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Net profit
- $-4,275.00 in the default Fund of Funds Return calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Value multiple
- 0.81 × in the default Fund of Funds Return calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Total return
- The primary output of this tool: -19.00% for the default inputs, computed exactly from Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1.
- Worked example
- Every substitution in order, from the example inputs to -19.00% — the audit trail for the headline figure.
- Verdict band
- The interpretation attached to a result (“Negative over the hold — the annualised figure below sizes the bleed” on these inputs), which turns a bare number into a position on a scale.
- Sensitivity (±10 %)
- How far the Fund of Funds Return moves when a single input is nudged ten percent either way; the ranked list on this page is computed live from this engine.
Methodology, sources and limits
Everything above runs on one stated formula, applied without hidden coefficients: Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1. Source of record: Time-weighted return arithmetic per CFA Institute conventions. Where a professional version of this calculation differs, it differs in inputs and jurisdiction-specific coefficients, not in the algebra — which is why re-checking your inputs beats hunting for a second calculator.
Treat the output as a precise answer to the question you typed: exact arithmetic, transparent formula, published source, no hidden rounding. Nothing is smoothed, weighted or adjusted behind the scenes; where judgement enters, this page says so and names the input responsible.
Next steps after the calculation
Pair this figure with the companion outputs above — the headline sizes the prize, the companions describe the risk.
The audience here is investors and founders comparing opportunities on equal terms. Everything you need to defend the result — formula, substitution, sensitivity, source — is printed above, so the only remaining variable is the honesty of your inputs.