Rolling Returns Guide
Published 2026-01-08. Last updated 2026-04-17. Editorial review: Know Your PMS editorial standards. By Abhimanyu Kucheria for Know Your PMS.
Topic cluster: Risk & Return Metrics
Headline CAGR hides the journey. This cluster explains drawdowns, volatility, rolling returns, capture ratios, and risk-adjusted measures — with Indian PMS factsheet context.
Pillar guide: Max Drawdown Explained
More in this cluster:
- Max Drawdown Explained
- Volatility Explained
- Calmar Ratio Guide
- Information Ratio Guide
- Capture Ratios Guide
What it means (plain English)
Rolling returns compute CAGR over a fixed window (e.g., 36 months) ending each month, producing a series instead of one calendar-year number. A PMS with volatile calendar years may show stable rolling 3-year—or the opposite.
Indian allocators favor rolling 3Y for medium-term consistency and rolling 5Y for cycle inclusion. Compare rolling series to benchmark and peer median.
Rolling returns punish one-year wonders: a spike lifts many subsequent windows temporarily—watch decay as strong year rolls off.
Use on Know Your PMS or spreadsheet from monthly NAV. Pair with rolling Sharpe if available.
Worked example (Indian PMS scenario)
5-year CAGR 16% hides rolling 3-year windows: 22% (ending Mar 2022), 11% (ending Mar 2023), 19% (ending Mar 2024), 14% (ending Mar 2025). An investor who committed in Apr 2021 experienced the 11% window—not 16%.
Rolling returns answer: 'What did a 3-year holder actually earn if they bought on any random date?' On ₹1 crore, 11% vs 22% over 3 years is ₹3.6 lakh vs ₹7.3 lakh profit—double the dispersion.
Inspect worst rolling 3-year and best rolling 3-year percentiles. If worst is still positive, quality is high; if worst is −5%, ensure you can hold through that before committing ₹2 cr wedding corpus.
Why it matters for PMS scheme selection
Rolling returns answer: 'How often was this manager good over meaningful horizons?'—far harder to fake than one calendar year.
See the complete PMS evaluation framework
- Smooths single lucky calendar years
- Shows consistency across market phases
- Enables percentile tracking over time
- Supports SIP/lump-sum timing humility
- Complements calendar return tables
How to interpret it (practical checklist)
- Compute rolling 3Y and 5Y monthly series
- Compare to benchmark rolling returns
- Note % of months beating peer median
- Watch rolling return when best year drops off
- Align window length with your horizon
- Use net returns consistently
- Chart rolling return vs rolling drawdown together
Explore related metrics · Compare PMS schemes · Rolling 1Y
Common pitfalls (how this gets misused)
Read our methodology for assumptions and limitations.
- Only calendar years in pitch decks
- Rolling 1Y too noisy for PMS decisions
- Different inception dates truncating series
- Gross vs net mixing
- Ignoring rolling return level vs trend
- Short track record making rolling meaningless
Related metrics to review together
Use this guide alongside these metrics to avoid one-number decision-making:
Related guides
- Information Ratio Guide
- Calmar Ratio Guide
- Ulcer Index Guide
- Capture Ratios Guide
- Profit Factor Guide
See also
FAQs
Rolling 3Y vs 5Y—which for PMS?
3Y for recency-weighted consistency; 5Y for full cycle including 2018–2022 stresses. Prefer 5Y if track record allows.
Do rolling returns include fees?
Should use net NAV. Confirm with manager—gross rolling misleads.
Can rolling returns predict future?
No— they describe persistence of past. Better predictor than 1Y rank alone, still not guarantee.
Next: How to compare PMS schemes · Compare schemes · All guides
Frequently asked questions
- Rolling 3Y vs 5Y—which for PMS?
- 3Y for recency-weighted consistency; 5Y for full cycle including 2018–2022 stresses. Prefer 5Y if track record allows.
- Do rolling returns include fees?
- Should use net NAV. Confirm with manager—gross rolling misleads.
- Can rolling returns predict future?
- No— they describe persistence of past. Better predictor than 1Y rank alone, still not guarantee.