Price return and total return are two different ways to measure the performance of stocks, bonds, and ETFs. Here are the key differences:
Price Return
- Price return, also known as capital return, only considers the change in the asset’s price or market value over a specific period.
- It does not take into account income generated from the asset, such as dividends for stocks or coupon payments for bonds.
- Price return is a simple measure of how the market value of the asset has changed, excluding any income received.
Total Return
- Total return includes not only the price appreciation of the asset but also any income generated from it, such as dividends, interest, or distributions.
- It provides a more comprehensive view of an investment’s performance as it accounts for all sources of return.
- Total return is often considered a more accurate measure of an investment’s true profitability.
What data should I be using?
Generally, technical analysts use Price Return data because those are the prices at which the stocks actually traded (ignoring stock splits!). Total Return data changes the historical prices to take into account the extra income from the dividend or interest payments. By default, the charts in Optuma are Price Returns, but - if using our end-of-day data - it’s possible to display the Total Return data by clicking on the chart header:
Here’s an example showing the difference with IBM. The Price Return in black has been overlaid with the Total Return chart (green):
As you can see, the further back you go the bigger the disparity between the lines because more dividends have been paid so the more the historical prices drop. Recent prices will converge, and will be the same since the last payout.
On a price return basis IBM is currently at $147, way below its 2013 all-time high of $205, but when the dividend payouts are included the equivalent price at that time was $130. This means that if you bought (and held!) IBM back then and received all the dividends you would be up about $17 per share - although I’m not sure how many of you would have held on until the 2016 low!
Note
In the new testers currently in development, we will be calculating performance using total returns (when the data is available). This way the testers factor in dividends into the strategy results.
Comparing historical returns
It’s possible to compare the total returns in Optuma’s watchlists. Below are two identical lists with the same column formulas. By changing the Price Adjustment property in the bottom watchlist to Total Returns, all the column calculations will use the historically adjusted data. So BHP on the ASX has gained 22% over the last two years when taking into account dividends, versus only 18.8% on a price return basis. The other examples are for a Fidelity US Mutual fund, a stock, and a bond ETF:
Note
If you are unable to see any difference between price and return charts the most efficient way to ensure that the historical adjustment factors have been downloaded would be to download the full exchange history again under ( Data > Exchange ) menu.
In summary, price return focuses solely on changes in the market price of an asset, while total return provides a measure of the returns you would have achieved from holding the security by considering both price changes and income generated by the asset, giving a more accurate representation of an investor’s actual gains or losses.
Senior Software Specialist at Optuma
Darren is the senior Software Specialist at Optuma based in Brisbane, Australia. Darren grew up in the UK and attended college in the USA where he earned a BA in Economics from St Mary’s College of Maryland. He went on to spend a few years working at the Nasdaq Stock Market in Washington DC. Darren joined Optuma in 2009 after attending an introductory technical analysis course that used the software.
FAQs
In summary, price return focuses solely on changes in the market price of an asset, while total return provides a measure of the returns you would have achieved from holding the security by considering both price changes and income generated by the asset, giving a more accurate representation of an investor's actual ...
What is the difference between price return and total return? ›
A price return index only considers price movements (capital gains or losses) of the securities that make up the index, while a total return index includes dividends, interest, rights offerings and other distributions realized over a given period of time.
Is S&P 500 total return or price return? ›
The S&P 500 Total Return Index (SPTR) is one example of a total return index. The SPTR is different from the standard S&P Index (SPX), which does not include dividend gains.
What is the difference between NR and TR in S&P 500? ›
NR - means Net Return. Net Return indices include dividends after the deduction of withholding taxes. TR - means Total Return.
What is the difference between PRI and Tri? ›
Total Return Index (TRI)
The TRI tracks capital appreciation as well as cash distributions such as dividends and interest. In comparison to PRI, TRI more transparently reflects the returns generated by an investor by holding their investment.
What is the difference between today's return and total return? ›
What is the difference between total return and today's return? Total return is a measure of the value that an investment has produced since it was added to your portfolio. Today's return only looks at the change in value for the current day, as compared to the closing price on the previous day.
How do you calculate the price return? ›
The Price Return is the change in price over a specific period of time displayed as a percentage. For example, if a person bought Stock A 1 year ago for $10 and it is currently selling at $15, it's period return is ($15/$10)-1 = 50%.
What is the difference between total return price and total return NAV? ›
The total return of a fund includes distribution payouts, such as dividends; thus, it includes distribution that's not been reinvested into the fund, whereas net asset value return only includes distributions that are reinvested.
Does total return include yield? ›
Total return refers to interest, capital gains, dividends, and distributions realized over a given period of time. Investors focused on yield are generally interested in income and less concerned with growth, such investments may include CDs and bonds.
What is the average return of the S&P 500 in the last 100 years? ›
Stock Market Average Yearly Return for the Last 100 Years
The average yearly return of the S&P 500 is 10.62% over the last 100 years, as of the end of April 2024. This assumes dividends are reinvested.
SPX is a symbol referring to the S&P 500 index, which consists of the largest 500 publicly traded companies, as measured by market capitalization. Investors can't directly invest in SPX, but they can invest in ETFs or index funds that are designed to track the performance of the index.
What is the difference between S&P 500 and S&P 500 VIX? ›
But unlike other indices, whose results indicate market performance, the VIX level communicates a different type of information: the 30-day implied volatility of the S&P 500. Implied volatility, in turn, indicates the expected range of the S&P 500, above and below its current level, over the next 30 days.
Is total return gross or net? ›
(Gross) Total Return (TR) reflects the price performance, plus the full value of all dividends, both special and regular. Net Total Return (NTR) reflects the price performance, plus the net amount of all special and regular dividends after applying an assumed foreign tax withholding rate.
What is the difference between PRI and SIP trunking? ›
A PRI trunk is a single line, usually a T-1 connection in North America, with 23 voice channels transmitted as electrical signals over copper wire, using a circuit-switched model for making voice connections. A SIP trunk sends voice calls as data over an existing ethernet or fiber connection.
What is a PRI line? ›
A PRI line, or Primary Rate Interface line, is a telephone line that uses the PRI standard in telecommunications. PRI is a standard that enables traditional phone lines to carry multiple lines of voice and data.
What means total return? ›
What Is Total Return? Total return, when measuring performance, is the actual rate of return of an investment or a pool of investments over a given evaluation period. Total return includes interest, capital gains, dividends, and distributions realized over a period.
What is the difference between average return and total return? ›
What Is the Difference Between an Annualized Total Return and an Average Return? The key difference between the annualized total return and the average return is that the annualized total return captures the effects of compounding, whereas the average return does not.
What is the difference between total return and income return? ›
The return on an investment usually involves two elements: the capital (or price) return, and the income return. The sum of both the capital and income return is then called the “total” return.
What is the difference between total return and absolute return? ›
While total return funds aim to generate as much returns as possible from all eligible sources, absolute return funds try to achieve positive returns in all market environments. This difference is also reflected in the benchmarks of most products.
