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A total return index is an index that measures the performance of a group of components by assuming that all cash distributions are reinvested, in addition to tracking the components' price movements. [1] While it is common to refer to equity based indices, there are also total return indices for bonds and commodities. [2]
The problem can lead to the pernicious inversion of performance ordering with bond ETF's or stocks paying high dividends. [6] [7] A variant measure of total return is tax-adjusted or after-tax return, which approximates the effective return that a tax-paying investor actually sees considering taxes paid on distributions. [8]
Because the 30-day yield is a standardized mandatory calculation for all United States bond funds, it serves as a common ground comparison of yield performance. [1] Its weakness lies in the fact that funds tend to trade actively and do not hold bonds until maturity. In addition, funds do not mature.
ETFs are similar to mutual funds but often have lower management fees, making them more affordable. They invest in stocks, bonds or other assets and can provide significant returns, even for ...
ETFs vs. stocks. ETFs are often composed of stocks or bonds, and a single ETF may have dozens, even hundreds, of stocks among its holdings.The ETF’s value is based on the weighted average of ...
On top of that, the S&P 500 has shown its strength over time, generating an annualized average return of more than 10% since its debut as a 500-company index. The Ultimate Guide to Investing in ...