Total return refers to the overall return on an investment, which includes both capital gains and any income generated from the investment over a certain period of time. In other words, it is the financial gain or loss that an investor realizes from an investment over a particular time frame.

Total return is used extensively in the financial industry to assess the performance of various investment vehicles, such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs). It provides a comprehensive view of how well an investment has performed over a certain period of time, taking into account both the increase in the value of the investment and any income generated from it, such as dividends or interest payments.

Investors use total return as a measure of investment performance, as it provides a more accurate picture of how well an investment has performed over time compared to only looking at the change in market value. It is particularly useful for long-term investments, where the goal is not just price appreciation, but also generating income.

Total return calculation takes into consideration the initial investment, any income generated, and any capital gain or loss realized upon selling the investment. This calculation provides a single metric that reflects how well the investment has performed in both price appreciation and income generation. The total return can be expressed either as a percentage or as a dollar amount and is usually calculated for annual or more extended periods.

Overall, total return is a vital metric in the financial industry and helps investors to make informed decisions about their investment choices. By providing a comprehensive view of investment performance, total return can help investors to determine whether an investment has been a good investment or not and to make adjustments to their portfolio selection accordingly.