Thursday, December 23, 2010

Return

Return refers to the economic benefit that an investor receives from investment. Return on investment encompasses changes in the value of the investment i.e. capital gain or loss, as well as any income, dividends or related distributions. The return an investor receives will depend on the skill of the fund manager and the overall course of the markets in which the fund is invested. The net returns an investor received will also depend on fees and expenses, accounting treatments, and taxation. Return is an important concept as it is basically the key reason for investing. Return is usually expressed as a percentage for example, if an investor invests $100 and receives $110 the return is 10%. There are some complications though, for example the period over which the return was generated is important to note, as is the number of compounding periods and type of return that is reported. It is good to ask if a fund manager reports their returns in accordance with the GIPS standards (Global Investment Performance Standards).

Synonyms:  Reward, Return on investment, Fund performance, Fund return, Percentage return, Investment performance

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