This text from a previous post may help. Let
AD = average USD price per share
AG = average GBP price per share
CD = current USD sell price per share
FX = current GBP per USD
Define
RETURN% = (CD * FX/AG - 1) * 100%
FX IMPACT% = (AD * FX/AG - 1) * 100%
GAIN/LOSS% := RETURN% - FX IMPACT%
Note that this is not the true GAIN/LOSS% that would be experienced by a USD investor. The value that a US investor would look at is simply (CD/AD-1)*100%. What we have above is USD gain/loss per share, converted at today’s exchange rate to GBP, and then expressed as a percentage of the average GBP cost per share ie (CD-AD)*FX/AG * 100%
In truth RETURN should be [GAIN/LOSS] x [FX IMPACT] since these effects are actually multiplicative not additive. But it is easier to understand if we make them additive, which is what is done with the definition of GAIN/LOSS% as the difference of the other two,
The approximation being used here is
(1+a)(1+b) = 1 + a + b + ab, and imagine ab is small.
A gain of +1% combined with fx effect of +2% is actually (1.01)(1.02) = 1.0302 ie 3.01%. But it is clearer to most people if this is shown additive.