By Leanna Kelly When investors seek to compare the performance of two assets over time, they need to look at annualized return. Why this metric, specifically? Because it takes into account asset performance, time, and compounding—the most important factors attributing to performance. Annualized return is the yearly rate of return for a given asset over a defined period of time. It is also known as the compounded annual growth rate (CAGR).
Investors who understand the meaning of annualized return and what it represents will find themselves able to better-track the performance of assets against each other. It’s a metric that’s not difficult to calculate, …read more
