Your retirement nest egg at age 70 after investing $1,000/year for 18 years beginning at age 1 (assuming an average annual return
To calculate the Treynor ratio, the average annual return
was used calculated from the geometric mean of the monthly returns on each fund.
If investors want to find the arithmetic average annual return
of a series of 1-year holding-period returns they simply sum the 1-year holding-period returns and divide by the number of years of returns.
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.
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%).
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.
During this period the average annual return
was 9.7 per cent.
In October 1999, he started the Westcore Select Fund, which racked up an average annual return
of 46 percent in its first two years.
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.
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.
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%.
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.