Calculating investment returns using "PRODUCT" function?

mrbounce99

New Member
Joined
Jun 7, 2012
Messages
4
Hi, I'm getting 2 slightly different answers with my returns, why????

Initial investment (say) $2,000,000

% monthly returns(1-4): 0.65%, -0.6%, 0.87%, -9.36%.

If I use the "PRODUCT" function to obtain an answer to my overall monthly returns its -8.53%

Actual monthly returns (1-4): $12,990, -$12,028, $17,482, -$187,292

If I total the monthly returns -$168,848 and calculate this as a % of my initial investment ($2m) I get -8.44%

My question is, why is this -8.44%, different to -8.53%?
Thank you
 

Excel Facts

Why does 9 mean SUM in SUBTOTAL?
It is because Sum is the 9th alphabetically in Average, Count, CountA, Max, Min, Product, StDev.S, StDev.P, Sum, VAR.S, VAR.P.

shg

MrExcel MVP
Joined
May 7, 2008
Messages
21,836
Office Version
  1. 2010
Platform
  1. Windows
I get 8.442% both ways:

Code:
       --A-- -----B----- ---C--- D -------------E-------------
   1   Month   Amount                                         
   2       0  2,000,000                                       
   3       1  2,012,990   0.649%   C3 and down: =B3/B2-1      
   4       2  2,000,962  -0.598%                              
   5       3  2,018,444   0.874%                              
   6       4  1,831,152  -9.279%                              
   7                                                          
   8                     -8.442%   C8: {=PRODUCT(1+C3:C6) - 1}
   9           (168,848)           B9: =B6-B2                 
  10                     -8.442%   C10: =B9/B2
 

shg

MrExcel MVP
Joined
May 7, 2008
Messages
21,836
Office Version
  1. 2010
Platform
  1. Windows
You're welcome. Sorry about that April.
 

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