Point-to-Point return is the return calculated between two specific fixed dates — susceptible to cherry-picking if start/end dates are chosen selectively.
Point-to-point return measures performance from one specific date to another. For example, 'return from January 1, 2020 to January 1, 2025.' The result depends entirely on where those two dates fall in the market cycle. If the start date is at a market low and the end date is at a market high, the return looks exceptional. If reversed, it looks terrible. This makes point-to-point returns prone to selection bias in marketing materials.
If you pick 'January 2020 to December 2021' as your period for an equity fund, you capture the COVID crash plus a spectacular recovery — showing massive returns. If you pick 'January 2018 to December 2019' for a midcap fund, you capture a multi-year underperformance. Point-to-point returns are honest if the dates are objective; they're misleading if cherry-picked. Always ask: why these specific dates?
Pick two specific dates (start date and end date).
Annualised return = (NAV on end date ÷ NAV on start date)^(1/years) − 1.
Common point-to-point benchmarks: 1 year, 3 years, 5 years, 10 years from TODAY — standard in industry.
Be cautious with non-standard date pairs in marketing materials.