Return 
 • The total gain or loss experienced on an investment over a given period of time; calculated by dividing the asset's change in value plus any cash distributions during the period by its beginningofperiod investment value. 
 • The percentage gain or loss for a security in a particular period, consisting of income plus capital gains relative to investment. The Real Rate of Return is the annual return realized on that investment, adjusted for changes in the price due to inflation. 
 • The change in the value of a portfolio over an evaluation period, including any distributions made from the portfolio during that period. 

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 Embedded terms in definition 
 Capital gain Capital Cash Change Distributions Evaluation period Income Inflation Investment value Its Plus Portfolio Rate of return Real rate of return Security Time


 Referenced Terms 
 Abnormal returns: Part of the Return that is not due to systematic influences (market wide influences). In other words, abnormal returns are above those predicted by the market movement alone. Related: excess returns.

 After tax real rate of return: Money aftertax rate of Return minus the inflation rate.Money aftertax rate of Return minus the inflation rate. Hence, this refers to the purchasing power increase.

 After tax real rate of return: Money aftertax rate of Return minus the inflation rate.Money aftertax rate of Return minus the inflation rate. Hence, this refers to the purchasing power increase.

 Alpha: Is a measure of the incremental reward (or loss) that an investor gained in relation to the market. Typically, this is measured as performance of a selected portfolio relative to a market benchmark. An enhanced S&P 500 portfolio might have an alpha of .25 which means that the pickup was .25% or a quarter point better than the standard.A measure of selection risk (also known as residual risk) of a mutual fund in relation to the market. A positive alpha is the extra Return awarded to the investor for taking a risk, instead of accepting the market return. For example, an alpha of 0.4 means the fund outperformed the marketbased return estimate by 0.4%. An alpha of 0.6 means a fund's monthly return was 0.6% less than would have been predicted from the change in the market alone. In a Jensen Index, it is factor to represent the portfolio's performance that diverges from its beta, representing a measure of the manager's performance.

 Alpha equation: The alpha of a fund is determined as follows: [ (sum of y) ((b)(sum of x)) ] / n where: n =number of observations (36 months) b = beta of the fund x = rate of Return for the S&P 500 y = rate of return for the fund


 Related Terms 
 