1. What is Index Fund Performance?

Index fund performance measures the percentage change in value of an index fund investment over a specific period. It helps investors evaluate the return on their investment relative to the initial amount invested.

2. How Does the Calculator Work?

The calculator uses the performance formula:

Where:

• Ending Value — Current value of the investment ($)
• Beginning Value — Initial investment amount ($)

Explanation: The formula calculates the percentage change in value from the beginning to the end of the investment period.

3. Importance of Performance Calculation

Details: Calculating investment performance is essential for evaluating investment strategies, comparing different funds, and making informed decisions about portfolio management.

4. Using the Calculator

Tips: Enter the beginning value and ending value in dollars. Both values must be positive numbers, with the beginning value greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What does a negative performance percentage mean?
A: A negative percentage indicates that the investment has decreased in value from the beginning to the end of the period.

Q2: Does this calculation account for dividends?
A: No, this basic calculation only considers the principal value change. For total return including dividends, you would need to include dividend payments in the ending value.

Q3: Over what time period should I calculate performance?
A: Performance can be calculated for any time period - daily, monthly, quarterly, or annually - depending on your analysis needs.

Q4: How does this differ from annualized return?
A: This calculates simple percentage change, while annualized return adjusts for the time period to show what the equivalent yearly return would be.

Q5: Can I use this for other types of investments?
A: Yes, this formula works for calculating the performance of any investment where you can identify beginning and ending values.