Annual Total Return

Annual total return is a measure of the performance of an investment over a single year, including both the capital gains (or losses) and any income generated, such as dividends or interest. It is expressed as a percentage of the initial investment and provides a comprehensive view of how much an investment has grown (or declined) over the course of a year. Annual total return is commonly used to assess the performance of mutual funds, stocks, bonds, and other investment vehicles.

Example

If you invest $1,000 in a mutual fund and it grows to $1,100 by the end of the year, plus you receive $50 in dividends, the annual total return would be 15% ($150 total gain on a $1,000 investment).

Key points

• Measures the performance of an investment over a single year.

• Includes both capital gains/losses and income like dividends or interest.

• Expressed as a percentage of the initial investment.

Quick Answers to Curious Questions

It includes capital gains or losses and any income generated by the investment, such as dividends or interest, over a one-year period.

It provides a comprehensive measure of how much an investment has grown or declined in value over a year, helping investors compare different investments.

Yes, if the investment’s value decreases over the year, the annual total return can be negative, reflecting a loss.