QUESTION: How can I perform a fractional year gain/loss, e.g., over a period of 1.5 years?

ANSWER: Use the steps below to calculate the results of a gain/loss for a fractional period. 

Let’s assume a fractional gain/loss for the period 1/1/2011 – 7/1/2012 (1.5 years) is desired.

1. Divide your beginning and end of period data into two groups, based on the change in age nearest birthday over the period (change = age at end of period minus age at beginning of period):

1. Group A: Participants whose change in age nearest birthday equals the gain/loss period rounded down (1 year in our example).

2. Group B: Participants whose change in age nearest birthday equals the gain/loss period rounded up (2 years in our example).

2. Run a gain/loss for Group A. The beginning of period valuation should use the original valuation date (1/1/2011 in our example). The end of period valuation date should be the anniversary of this date that precedes the end of period (a valuation date of 1/1/2012 in our example).

3. Run a gain/loss for Group B. The beginning of period valuation should use the original valuation date (1/1/2011 in our example). The end of period valuation date should be the anniversary of this date that follows the end of the period (a valuation date of 1/1/2013 in our example).

4. You now have the gain/loss for each group, but at the wrong point in time. To correct for this, you will need to

1. roll forward the gain/loss in (2) to the correct date (7/1/2012 in our example) with 1/2 year's interest

2. roll backwards the gain/loss in (3) to the correct date (7/1/2012 in our example) with 1/2 year's interest

We believe these steps give a good approximate representation of the gain/loss; however, due to timing nuances will not be exact.