Total Return
Price change plus income, as a single return figure.
What is Total Return?
The complete return picture: capital appreciation plus dividends or interest, usually assuming reinvestment. Quoting price return alone understates long-run equity results substantially.
Total Return: a worked example
A stock up 6% that also paid a 3% dividend delivered a 9% total return.
More terms in Portfolio Management
Asset Allocation
How a portfolio is split across stocks, bonds, cash, and alternatives.
Rebalancing
Periodically restoring the portfolio to its target weights.
Dollar-Cost Averaging
Investing a fixed amount on a fixed schedule regardless of price.
Modern Portfolio Theory (MPT)
Optimize the portfolio as a whole, not security by security.
Efficient Frontier
The set of portfolios with the best return for each level of risk.
Capital Asset Pricing Model (CAPM)
Expected return = risk-free rate + beta x market risk premium.
Efficient Market Hypothesis
Prices already reflect available information.
Compound Annual Growth Rate (CAGR)
The smoothed annual rate that gets you from start to end value.