Average Annual Total Return Definition & Meaning | Financial Term | CSIMarket
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Glossary

Average Annual Total Return

Financial Term

Average Annual Total Return (AATR) refers to the average yearly rate of return on an investment over a specific period, taking into account all income earned and changes in the asset*s value during that time. The calculation of AATR takes into account dividends, interest, and capital gains. It is commonly used to compare the performance of different investments over the same period.

AATR is widely used in the financial industry for evaluating the historical performance of various investment options such as mutual funds, exchange-traded funds (ETFs), and individual stocks. By calculating the AATR, investors can assess how much they might expect to earn over the long-term if they invest in a particular asset. This makes it easier to compare different investment options and to determine which ones are likely to provide the best returns for a given level of risk.

For mutual funds, the AATR is typically calculated over a three or five-year period, while for individual stocks, it may be calculated over a longer period. This helps investors to identify the most profitable funds and securities that they can invest in for the long term. However, it is important to note that past performance is not a guarantee of future results, and AATR should only be used as one factor in making investment decisions.


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