Total return is your annual gain or loss on an equity or debt investment.
It includes dividends or interest, plus any change in the market value of the investment. When total return is expressed as a percentage, it's figured by dividing the increase or decrease in value, plus dividends or interest, by the original purchase price.
On bonds you hold to maturity, however, your total return is the same as your yield to maturity (YTM).
Calculating total return is more complex if your earnings have been reinvested, as they often are in a mutual fund, to buy more shares. But fund companies do that calculation on a regular basis.
- Browse Related Terms: Capital gains distribution, Compounding, Direct investment, Direct purchase plan (DPP), Distribution, dividend, Dividend reinvestment plan (DRIP), dollar cost averaging, Fractional share, Growth, January Effect, reinvestment, total return, Total return index
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