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Portfolio Yield Calculator

Calculate actual and annualized yield on your MCA investment portfolio.

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Why Track Portfolio Yield?

Portfolio yield measures the actual return on capital invested in MCA deals. Unlike factor rates which represent theoretical returns, yield captures what you actually earned after defaults, slow pays, and partial collections. Annualizing the yield allows you to compare MCA returns against other investment options (stock market, real estate, bonds). A portfolio that returned $580K on $500K invested over 8 months generated 16% absolute yield and approximately 24% annualized yield. If your cost of capital is 15%, the 24% annualized yield means your spread is 9% -- the actual profit margin on deployed capital. Tracking yield over time reveals whether your deal selection is improving or deteriorating.

How to Use This Calculator

Enter invested and returned capital

Invested is total capital deployed into MCA deals. Returned is total capital collected back (including principal and profit). Include collections on defaulted deals in the returned amount.

Set the investment period

The number of months from first capital deployment to the measurement date. For ongoing portfolios, use the weighted average investment duration.

Compare to benchmarks

An annualized yield below your cost of capital means you are losing money. Target annualized yield of 20-30% for well-managed MCA portfolios.

Key Concepts

Absolute Yield

Total return divided by total invested, expressed as a percentage. (Returned - Invested) / Invested. Does not account for the time period.

Annualized Yield

Absolute yield converted to an annual equivalent. Allows comparison with other investments. Calculated by annualizing the periodic return: ((1 + absolute yield) ^ (12/months)) - 1.

Yield Spread

The difference between portfolio yield and cost of capital. Positive spread means profit. Negative spread means loss. The spread is your true margin on deployed capital.

Expert Insights

Yield Is Reality; Factor Rate Is Theory: A portfolio with a 1.30 average factor rate should theoretically yield 30% absolute return. In practice, defaults, slow pays, and collection costs reduce actual yield to 18-22%. If you are achieving actual yield above 25% on a diversified portfolio, your underwriting is excellent. Below 15%, something is wrong -- either defaults are too high or collection efficiency is too low.

Capital Velocity Matters: Yield is amplified by capital velocity -- how quickly your money comes back and gets reinvested. If a $100K investment returns $125K in 6 months and you reinvest immediately, you get two cycles per year instead of one. Annualized yield doubles. Fast-repaying deals (5-7 month terms) generate higher annualized yield than slow-repaying deals (12-15 month terms) at the same factor rate.

Frequently Asked Questions

For syndication investors: 18-25% annualized yield after defaults is achievable with diversified, well-underwritten portfolios. For ISOs funding from their own capital: 25-35% is achievable because you control underwriting and capture the full spread. Below 15% annualized, you should reassess deal quality.

Significantly. A 10% default rate on a portfolio with a 1.30 average factor rate reduces theoretical 30% yield to approximately 17% actual yield (assuming 30% recovery on defaults). This is why default management is the single most important determinant of portfolio profitability.

No. Yield should only include actual cash collected, not expected future collections from active deals. Unrealized returns are uncertain -- they depend on merchants continuing to pay. Calculate yield only on completed deals or based on actual cash collected to date.

Results are estimates for educational purposes only. Actual amounts may vary based on your specific financial situation, market conditions, and other factors. This calculator does not constitute financial advice.