Ch.2 · Mutual Fund Structure Basics · medium
What is the difference between 'Absolute Return' and 'CAGR' as return measures for mutual funds?
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EXPLANATION
Absolute Return = (Current Value − Investment) ÷ Investment × 100. It does not account for the time period. CAGR (Compound Annual Growth Rate) expresses the return as an annualised rate accounting for compounding over the holding period. For investments held over 1 year, CAGR is more meaningful.
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