Market Return
Definition
Market return is the total gain or loss of a stock market index or asset class over a specific period, including price changes and dividends.
Explanation
Market return represents the average performance of a broad market index, such as the S&P 500. Historical average annual return for the S&P 500 is approximately 10% before inflation (7% after inflation). Market returns vary significantly year to year — a typical range is -10% to +30% in any given year.
Most active fund managers fail to beat the market over the long term, which is why index investing has become popular. Market returns serve as a benchmark for evaluating investment performance.
Example
The S&P 500 returned approximately -18% in 2022 and +26% in 2023. Over the last 30 years, the average annual return has been about 10%.