Compound Annual Return

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Related to Compounded 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 ?
It is hard to argue with 18% compounded annual returns over the past decade.
Bill Zhan's Tianyou Fund has had a compounded annual return of 35.62% since the fund started in 2012.
Palau's trust fund can distribute $15 million per year for 35 years if it earns a compounded annual return of at least 8.1 percent, a rate lower than the average earned thus far.
According to the study, the average equity investor earned a 2.57% compounded annual return over an 18-year period (1984 to 2002), versus 12.22% for the S&P 500 Index.
The weighted-average bias of the forecast was -0.92 percent, which indicated that the forecast was, on average, slightly lower than the actual compounded annual return of 12.57 percent, although the difference was not significantly different from zero (t = 0.31).
The reward to shareholders has been overwhelming, a compounded annual return in excess of 52 percent.
The Ibbotson data in exhibit 2, page 136, provide only the geometric mean or compounded annual return on certain investments.
Since American Capital's 1997 IPO through the first quarter of 2016, it has earned a 9.0 percent compounded annual return, including interest, dividends, fees and net gains, from realizations of senior debt, subordinated debt, equity and structured products investments, totaling approximately USD28 billion of committed capital.
If you had invested in his Winton Futures Fund in 1997 when it launched, your money would have grown by almost 1000%, bringing in a compounded annual return of 13.73%.
Since American Capital's 1997 IPO through 3Q15, the company has earned a 9% compounded annual return, including interest, dividends, fees and net gains, on approximately 515 realisations of senior debt, subordinated debt, equity and structured products investments, totaling USD 25bn of committed capital.
It showed resilience after the 2008 financial crisis by giving 16 per cent compounded annual return between July 2009 and July 2012.
The BSE Sensex has given a compounded annual return of over 15 per cent in the past 25 years, but don't bank upon such performances.