Compound Annual Return


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Related to Compound Annual Return: CAGR

Compound Annual Return

Compound Annual Return

The average year-on-year growth rate of an investment over a number of years. While investments usually do not grow at a constant rate, the compound annual return smoothes out returns by assuming constant growth. This makes accounting for the investment tidier. It is calculated as:

Compound annual return = (Ending Value / Beginning Value)^((1 / n) - 1) where n is the length of time of the investment in years. It is also called the compound annual growth rate. See also: Average Annual Growth Rate.
References in periodicals archive ?
Assume you contribute $5,000 a year and average 10 percent compound annual return.
Over a three-year period, the subsidiaries in this sample of 119 carve-outs showed average compound annual returns of 20.
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The company recorded strong profitability, with a five-year average compound annual return on equity of 24.
7% compound annual return during the first two years and nine months of his tenure.
Since the end of 2000, when we launched our strategies, we have delivered a compound annual return to our shareholders of about 11 percent, substantially better than both the market and our peer group averages over that period.
The company recorded strong profitability, with its compound annual return on equity of 11.
This investment and operational philosophy has led to an aggregate compound annual return rate in excess of 35%.