A movie vs a photo
A single 3Y return is like a photo — one moment frozen in time. Rolling returns are like a movie — they show the full story across all possible time windows. A great photo doesn't guarantee a great movie.
Rolling Returns
The Problem with Point-to-Point Returns
When you see "3Y return: 15%", that's the return from exactly 3 years ago to today. Change the start date by even a month, and the number could be 12% or 19%. This is point-to-point return — one data point that can be misleading.
What Are Rolling Returns?
Rolling returns calculate the return for every possible start date over a given window.
3-Year Rolling Returns
For a fund with 10 years of data: Jan 2015→Jan 2018: 14%. Feb 2015→Feb 2018: 12%. Mar 2015→Mar 2018: 16%... Jan 2022→Jan 2025: 11%. This gives you hundreds of data points instead of one, revealing the fund's true consistency.
What Rolling Returns Reveal
- Consistency: Is the fund always in the 12-18% range, or does it swing from -5% to +40%?
- Minimum return: In the worst rolling period, what did the fund deliver?
- Probability of positive return: Over all 3-year windows, how often was the return positive?
- Category comparison: Which fund is more consistent over rolling periods?
Reading a Rolling Returns Chart
- X-axis: Start date of each rolling period
- Y-axis: Annualized return for that period
- Flat line (narrow band): Very consistent fund
- Spiky line (wide band): Volatile, inconsistent fund
Key Takeaway
A fund with 15% 3Y return today but inconsistent rolling returns is riskier than one with 13% 3Y return but narrow rolling return bands. Always check rolling returns before investing.
Don't Chase Point-to-Point Returns
A fund showing a fantastic 3Y return might have just had a lucky start date. Rolling returns reveal if the fund consistently delivers or just got lucky once.
Your Next Step
When comparing funds, look at rolling return consistency in the comparison view, not just the current 3Y/5Y numbers.