Annualized Return

Terms

The geometric average return of an investment, expressed as a yearly rate.

Description

Annualized return standardizes an investment’s performance over varying periods into an annual rate, aiding comparison across assets. Family offices use it to evaluate portfolio performance, especially for multi-year investments like private equity. It accounts for compounding but may mask volatility. Clear reporting ensures clients understand long-term growth versus short-term fluctuations.

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