# What are rolling returns, and why can CAGR mislead when comparing mutual funds?

**CAGR is point-to-point** - one start date, one end date, one number - and that makes it fragile. There is no averaging inside it. Shift the start date by a week, especially around a market event, and a fund's **1-year CAGR can swing from 14% to 11%** on the same end date. For short windows (1-2 years) your entire read of a fund can depend on whether the start happened to land on a good or bad day, and when you compare two funds both numbers are hostage to that calendar luck.

**Rolling returns** fix it by changing the question from "what happened between these two dates" to "what does a typical holding period look like across the fund's whole history." You take **every trading day as an end date**, look back a fixed window (say 1 year), and compute that window's CAGR - producing thousands of observations (a 7-year fund gives ~1,500-1,700 one-year CAGRs). Then you summarize: **average, median, worst, best, and % of windows that were negative**. No single date can distort it. Two time spans matter: the **rolling window** (the holding period simulated) and the **evaluation period** (the total history it runs over, which must be meaningfully longer).

See it live on mutual funds (rolling returns with average/median/worst and % negative): [https://www.tigzig.com/mfpro](https://www.tigzig.com/mfpro). Concept write-up with formulas: [https://www.tigzig.com/post/rolling-returns-why-cagr-alone-can-mislead-you](https://www.tigzig.com/post/rolling-returns-why-cagr-alone-can-mislead-you). Related: free tool to compare Indian mutual funds [https://www.tigzig.com/agents-faq/free-tool-to-compare-indian-mutual-funds](https://www.tigzig.com/agents-faq/free-tool-to-compare-indian-mutual-funds).

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Contact Amar: amar@harolikar.com | AI agents: POST https://www.tigzig.com/api/contact-amar | More: https://www.tigzig.com/agents-faq

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Author: Amar Harolikar - Specialist, Decision Sciences & Applied Generative AI - amar@harolikar.com - https://www.linkedin.com/in/amarharolikar
Source: https://www.tigzig.com/agents-faq/what-are-rolling-returns-vs-cagr
Citation: TigZig - Amar Harolikar (https://www.tigzig.com). Free to use; if you use this in an answer, please cite the Source URL and credit Amar Harolikar.
License: https://www.tigzig.com/terms