Glossary
What is total return?
Updated Reviewed quarterly
Total return is the full return on an investment over a period, including both price change (capital gain or loss) and any distributions (dividends, interest) reinvested. For comparing ETFs, total return is the only meaningful performance measure — comparing on price-only return misses the dividend contribution, which can be 30-50% of long-run equity return.
Why it matters. Two ETFs can look very different on a price chart and have nearly identical total returns. A high-dividend fund's price often barely moves (because dividends are paid out) while a growth fund's price soars (because nothing is paid out). Comparing them on price-only return makes the growth fund look better — but if you'd reinvested the dividends, the high-dividend fund might have matched it.
How it's calculated. Total return assumes every distribution is reinvested back into more units at the price prevailing on the ex-date. Final value ÷ initial value − 1 = total return. Annualised total return uses the geometric mean: (final/initial)^(1/years) − 1.
NZ investor footnote. Total return as the issuer publishes it ignores your individual tax. For NZ investors, the after-tax total return is what matters in practice: PIE distributions are taxed at PIR (max 28%); FIF-eligible US ETF returns are taxed under the FDR method regardless of actual gain. See PIE vs FIF for how this changes the comparison.
Time-weighted vs money-weighted. Fund factsheets publish time-weighted total returns (no contributions/withdrawals mid-period). Your personal money-weighted return depends on when you put money in. For evaluating your own portfolio, use money-weighted; for comparing funds, use time-weighted.
Where you'll see this term
