Author Topic: NSR ROI Doesn't Add Up  (Read 1831 times)

medico

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NSR ROI Doesn't Add Up
« on: March 23, 2016, 06:18:02 PM »
Using NSR filters:
  • Issue Date 01/01/2012 - 12/31/2015
  • Grade: G
  • Purpose: Renewable Energy
Give you a list of 8 loans.
You can see the individual loan information on the Annual Income table with each respective ROI.
I have also downloaded the LC raw data and been able to replicate these individual ROI numbers in Excel and Tableau.
However, the combined ROI on NSR shows (23.54). I am completely lost as to how this is calculated, since it is neither a simple average nor a loan amount weighted average.

Anybody have insight?

Fred93

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Re: NSR ROI Doesn't Add Up
« Reply #1 on: March 24, 2016, 03:36:03 AM »
For most return formulas, averaging doesn't work.  In other words, the return on a portfolio is not = the average of the returns on the individual loans.  I believe the problem is that you are trying to average.

dompazz

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Re: NSR ROI Doesn't Add Up
« Reply #2 on: March 24, 2016, 06:53:02 AM »
If you have the raw data, sum the cash flows for each period and treat that like a single entity.  Run (X)IRR on that stream and you should get a number similar to what you see on the website.

medico

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Re: NSR ROI Doesn't Add Up
« Reply #3 on: March 24, 2016, 09:34:36 AM »
I figured it out. Using the NSR formula, I was performing the division on each loan separately, then averaging.
I've got it all working by actually following the formula... Summing the top part of the formula for all loans then summing the bottom part of the formula for all loans. Dividing each result.