Finance Investments

What is CAGR and how does it differ from absolute return?

QUICK ANSWER

CAGR (Compound Annual Growth Rate) measures the annualized growth rate of an investment over a period longer than one year, accounting for compounding.

Detailed Explanation

Absolute return only measures total percentage gain or loss regardless of time horizon. CAGR provides a standardized annual rate of return, making it easy to compare investments held across different time periods. Formula: CAGR = (Final Value / Initial Value)^(1/n) - 1.

Data Attribution & Rights

Source: SEBI Investor Education Guidelines (Open Data License)

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