AAGR, the arithmetic annual growth rate, is a strategy's total return divided by the number of years in the backtest, with no compounding applied. It is the reinvest-off counterpart to CAGR: the two share one row on the metrics view, and the Reinvest profits toggle decides which one is shown. Because AAGR ignores compounding, it usually reads higher than CAGR over multi-year gains.
Also seen as: arithmetic annual growth rate, simple annualised return, non-compounded annual return
How is AAGR calculated?
AAGR spreads the whole-period return evenly across the years, as a simple average with no year-on-year compounding.
where: total return is the whole-period gain as a fraction, and years is 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 the same 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.