Absolute Return (redirected from Absolute investment performance)

Absolute Return

The return on an asset, fund, or other investment expressed in dollar or percentage terms. That is, the absolute return is the return relative to the investment itself. For example, if one buys shares in a stock for $1000 and sells them for $1500, one may say that one has an absolute return of $500 or 50%. There is little analysis of the absolute return beyond that. Most of the time, the absolute return is less helpful to investors than the relative return, which compares the return on an investment relative to other, similar investments or to the market as a whole. See also: Absolute Return Fund.

---

Absolute Return

What Does Absolute Return Mean?

The return that an asset achieves over a certain period of time; it considers appreciation or depreciation (expressed as a percentage) of the asset, which is usually a stock or a mutual fund. Absolute return differs from relative return because it looks only at an asset's return; it does not compare returns to any other measure or benchmark.

Investopedia explains Absolute Return

Generally, mutual funds seek returns that are better than those of their peers, their fund category, and/or the market as a whole. This type of fund management is referred to as a relative return approach to fund investing. Absolute return funds seek positive returns by employing investment strategies that often are not permitted in traditional mutual funds, such as short selling, futures, options, derivatives, arbitrage, leverage, and unconventional assets. Alfred Winslow Jones is credited with forming the first absolute return fund in New York in 1949. Today, the absolute return approach to fund investing has become one of the fastest growing investment products in the world; it's called a hedge fund.

Related Terms:
• Mutual Fund
• Return on Assets
• Return on Investment
• Total Return
• Yield