Average Annual Return

The sum of the return rates of an investment over a given number of years divided by that number of years. For example, if one wishes to compute the average annual return over five years and the returns in each year were 2%, 5%, 7%, 9% and 4%, the AAR would be 5.4% per year (27% / 5 years). The average annual return is useful when gauging an investment's current annual return with respect to its historical return. In the above example, one may conclude that because the annual return in the most recent year (4%) is below the AAR, the investment may not be advisable.

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average rate of return

References in periodicals archive

To calculate the Treynor ratio, the average annual return was used calculated from the geometric mean of the monthly returns on each fund.

MUTUAL FUND MANAGEMENT PERFORMANCE IN TRANSITION COUNTRIES: DOMESTIC VS. FOREIGN MUTUAL FUND MANAGERS--RESEARCH FINDINGS FOR SLOVENIA

In the last year, US REITs posted an average annual return of 51.6 percent, compared to 35.1 percent for the S & P 500 and -4.9 percent for bonds.

"Dump REITs" is not the best strategy: the gap between REIT stocks and real estate stocks

Our return on this investment over two years is zero; but the fund's average annual return is 25 percent (-50% + 100% = 50%/2 years = 25%).

Why we are losing the war on investing for retirement (and how to win it)

This section of the rule, however, does not lay down any requirements for the key building blocks of advertised investment performance: portfolio composite construction (deciding the criteria for grouping client portfolios with similar investment objectives to calculate an overall rate of return), calculation methodology (time-weighted-return method, total return, average annual return or internal rate of return) and presentation (results net or gross of adviser fees) and disclosures.

Investment adviser advertising: for the uninitiated, the SEC's complex rules can have unintended consequences

During this period the average annual return was 9.7 per cent.

I've made a pretty Moneypenny

In October 1999, he started the Westcore Select Fund, which racked up an average annual return of 46 percent in its first two years.

Capital ideas: Veteran investor heads up hedge fund. (Pulling the Strings)

And, although the ladder in this example had a longer average maturity, the worst five-year period showed an average annual return of 5.1%, better than that for the Treasury bill.

BOND LADDERS: A LEG UP

It yielded an average annual return of 20.94 percent over the last five years, handily outperforming the 14.21 percent achieved by the Standard & Poors 500 (S&P) for the same period.

Hot Funds in the Summertime

From 1990 through 1999, stock companies bettered mutuals in average annual return on revenue, 3.34% to 2.03%; return on assets, 0.87% to 0.5%; and return on equity, 14.13% to 9.77%.

The Second Wave

When compounded over the course of a working lifetime (45 years), the value of a $1,500 annual employer contribution invested in equities could total $600,000 or more assuming, by today's standards, a modest 8 percent average annual return. In comparison, the historic rate of return on the stock market is between 10 and 12 percent.

Rolling Back Third-Party Intrusions in the Practice of Medicine