AAGR

Also seen as: arithmetic annual growth rate, simple annualised return, non-compounded annual return

Because AAGR ignores compounding, it usually reads higher than CAGR over multi-year gains.

How is AAGR calculated?

AAGR spreads the whole-period return evenly across the years, as a simple average with no year-on-year compounding.

$$\key{1}{\text{AAGR}} = \frac{\key{2}{\text{total return}}}{\key{3}{\text{years}}}$$

• the arithmetic annual growth rate
• the whole-period gain, as a fraction
• the length of the backtest in calendar years

How does Fincanva handle it?

• AAGR fills the annualised-return slot on the metrics view when Reinvest profits is off; with it on, the same slot shows CAGR.
• It is a plain arithmetic mean — the same total return over the same length always gives the same AAGR, regardless of the path taken to get there.
• It is expressed as a percentage and can be negative when a strategy loses money over the period.

What does it look like in practice?

Take a run that grows 10,000 into 16,100 over 5 years — a total return of +61%. AAGR divides that evenly: 61% ÷ 5 = 12.2% per year. CAGR on the same run is about 10% per year. The gap — 12.2% versus 10% — is the effect of compounding: AAGR counts each year's gain against the original stake, while CAGR compounds it on the growing balance.

No annual growth rate is a rate you can expect to repeat.