Total return
Market basicsAlso called: TRI
Price change plus dividends, the complete return from holding an asset.
In plain terms
A stock yielding 6% while falling 15% is not producing income. Judge holdings on this, never on yield.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Total return index
Market basicsAlso called: Price index, Price return index
The same index basket computed with dividends reinvested, as against the price index, which excludes them.
In plain terms
Over weeks the difference is invisible; over a decade it is two different-looking charts. Any statement that “the index went nowhere” is being made on the series that throws the dividends away.
Buy-and-hold return
Risk & psychologyThe total return from buying a security and holding it for a stated period or for its whole listed life, with no trading in between.
In plain terms
The honest measure of what owning one company delivered. Counted this way, the majority of listed firms have trailed the risk-free rate over their lifetimes.
Benchmark
Risk & psychologyThe index or standard against which portfolio performance is measured.
In plain terms
Only meaningful if it reflects what you would otherwise have done. Use total return versions.