Market Return

Quick Answer

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.

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

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%.

Frequently Asked Questions

What is Market Return?

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.

How does Market Return work?

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.