Definition:

1-year Performance refers to the percentage change in the value of an investment or asset over the course of one year. It is commonly used to assess how well an investment has performed over a 12-month period.

Formula:

1-year Performance = ((Ending Value - Beginning Value) / Beginning Value) * 100

How to use the metric:

Investors use the 1-year Performance metric to evaluate the annual return of an investment, compare it against benchmarks, or assess the performance of different investments over the same period. It helps in making informed decisions about buying, holding, or selling an asset.

Limitations:

1-year Performance can be misleading as it only captures a short period and may not reflect long-term trends or the overall health of an investment. It is also susceptible to market volatility and may not account for dividends or other income generated by the investment.

Applies to:

This metric is widely applicable across various industries, including stocks, mutual funds, ETFs, and other financial instruments where performance over a specific period is relevant.

Doesn't apply to:

Industries or investments that are not typically evaluated on an annual basis, such as real estate or private equity, may not find the 1-year Performance metric as useful due to their longer investment horizons and illiquidity.

Summary:

1-year Performance is a useful metric for assessing the annual return of an investment, but it should be used in conjunction with other metrics and longer-term performance data to gain a comprehensive understanding of an investment's potential and risks.