Returns & Performance Terms

An investmentAn asset or commitment of money made with the expectation of future income, growth, or both.'s gain or loss without comparison with a benchmark.

Example: The portfolioThe complete collection of investments owned by an investor or managed under one mandate. earns an absolute return of 8%.

Absolute return is an investment's percentage gain or loss over a period without comparing it with a benchmark. It answers the direct question: how much did this investment change?

If a portfolio starts at ₦1 million and ends at ₦1.08 million after including income and costs under the chosen method, its absolute return is 8%. A benchmark could have gained more or less, but that does not change the portfolio's absolute result.

State the period and whether the figure includes income, fees, tax and external cash flows. A positive absolute return can still be disappointing if inflationA sustained increase in the general price level, reducing the purchasing power of money. or a suitable benchmark was much higher. Do not confuse absolute return, a measurement, with an absolute-return fund, which is a strategy seeking positive results.

Investment return remaining after applicable taxes.

Example: A 12% gross yield becomes 10.8% after withholding taxTax deducted at source from specified income payments before the recipient receives the balance..

After-tax return is the investment return left after deducting the taxes that apply to the investorA person or organisation that commits capital with the expectation of a financial return.. It is closer to what the investor can keep than a quoted gross return.

If an investment earns a 12% cash yield and a 10% withholding tax applies to that income, the tax removes 1.2 percentage points, leaving a 10.8% yield before any other tax or cost. The calculation changes when different parts of the return receive different tax treatment.

After-tax return depends on the asset, account, investor and current law, so one published figure may not fit everyone. Separate taxes on income from taxes on gains, include allowable costs where relevant, and compare investments on the same after-tax basis. Confirm current rules rather than relying on an old rate.

The return attributed to investment skill after adjusting for benchmark performance or market riskThe possibility of loss because broad market prices or rates move against an investment..

Example: A fund that returns more than its risk-adjusted benchmark may be described as generating positive alpha.

Alpha is the return a fund appears to earn beyond what its market exposure or chosen risk model would explain. Positive alpha suggests added value; negative alpha suggests the fund delivered less than the model expected.

Suppose a fund returns 14%. Simply knowing that its benchmark returned 10% shows four percentage points of outperformance, not necessarily four points of alpha. An alpha calculation also adjusts for factors such as the risk-free rateThe return assumed to be available from an investment with negligible default risk over a matching period. and how strongly the fund normally moves with the market.

Alpha depends on the benchmark, model, dates and data used, so two valid calculations can differ. Check whether it is measured before or after fees and whether it persists across several market conditions. One positive period may reflect luck, an unsuitable benchmark or extra risk rather than repeatable manager skill.

A return converted into an equivalent yearly rate to make periods easier to compare.

Example: A 5% return over six months is roughly 10.25% annualised if the same rate compounds for another six months.

Annualised return converts a return earned over another length of time into an equivalent yearly rate. It helps compare periods of different lengths, but it is a mathematical conversion rather than a promise about the next year.

A 5% return over six months is about 10.25% annualised if the same six-month growth rate compounds for another six months: 1.05 × 1.05 − 1. Simply doubling 5% would give 10% and ignore compoundingThe process by which returns earn additional returns over time..

State the original measurement period whenever showing an annualised result. Annualising a very short period can produce a dramatic figure that is unlikely to continue. Compare figures only when they use the same treatment of income, fees and cash flows. For periods longer than one year, annualised return describes the compound yearly pace over the full period.

The simple average of periodic returns.

Example: Returns of 10%, 20%, and 0% have a 10% arithmetic mean.

Arithmetic mean return is the simple average of a series of periodic returns. Add the returns and divide by the number of periods.

If annual returns are 10%, 20% and 0%, the arithmetic mean is 10%: (10 + 20 + 0) ÷ 3. It describes the average one-period result in the sample, but it does not show the compounded growth of money across all three years.

Arithmetic mean is useful for estimating a typical single-period return when each observation has equal weight. It can overstate long-term growth when returns are volatile. Use the same interval—daily, monthly or yearly—for every observation, and use geometric mean when the question is how wealth actually compounded across consecutive periods.

A reference index or rate used to evaluate a fund's performance.

Example: An equity fundA fund that invests primarily in shares and seeks long-term capital growth. returning 12% is compared with a stock-market index that returned 15% over the same period.

A benchmark is a reference used to judge an investment's performance. It may be a market indexAn index designed to measure a market or market segment., interest rateThe price of borrowing money or the return paid for lending it. or another standard that represents a reasonable alternative for the same type of money.

If an equity fund returns 12% while an appropriate share-market index returns 15% over the same period, the fund underperformed that benchmark by 3 percentage points. A negative return can still be relatively strong if the benchmark fell further.

A useful benchmark should match the investment's asset classA group of investments with similar economic characteristics and market behaviour., currency, risk and time period. Both figures should use total return or both should use price return; mixing them creates a false comparison. Check the benchmark named in the fund documents and whether it still reflects what the fund actually owns. Inflation can be a useful goal benchmark, but it is not a substitute for a like-for-like performance benchmark.

The profit made when an asset or fund unit is sold for more than its cost.

Example: Units bought for ₦100,000 are redeemed for ₦118,000, creating an ₦18,000 capital gain before costs and tax.

A capital gain is the increase in an investment's value above its cost. It becomes a realised gain when the investment is sold; before sale, it is an unrealised gain that can still change.

If units cost ₦100,000 and are later sold for ₦118,000, the gain is ₦18,000 before transaction costs and tax. If selling costs ₦2,000, the gain after that cost is ₦16,000. Additional purchases at different prices require an appropriate cost-basis calculation.

A capital gain is only one part of investment return. Dividends, interest and distributions must also be included when measuring total return. Keep purchase confirmations, sale records, dates and costs, and check the current tax rules that apply to the asset and investor before calculating what remains after tax.

The constant annual rate that would grow a starting value into an ending value over a period.

Example: An investment doubling in five years has a CAGR of about 14.9%.

Compound annual growth rate, or CAGR, is the steady yearly rate that would turn a starting value into an ending value over several years. It summarises a multi-year result as one compounded annual rate.

An investment that grows from ₦1 million to ₦2 million in five years has a CAGR of about 14.9%: (2,000,000 ÷ 1,000,000)^(1÷5) − 1. The investment did not necessarily earn 14.9% in each individual year.

CAGR makes investments and periods easier to compare, but it hides the path between the start and end. Two investments can have the same CAGR while one experiences much larger losses along the way. It also does not handle additional deposits or withdrawals; use a cash-flow-aware return for that purpose.

Income or realised gains paid by a fund to its unitholders.

Example: A fund distributes ₦0.05 per unit, paying ₦5,000 to an investor who owns 100,000 units.

A distribution is income or realised gain that a fund pays to its unitholders. The payment may come from interest, dividends, rent or profits made when the fund sells investments.

If a fund pays ₦0.05 per unit and you own 100,000 units, the gross distribution is ₦5,000. You may receive cash or, if the fund offers reinvestmentUsing distributions or proceeds to buy additional units instead of receiving cash., use it to buy additional units. Tax and rounding can change the final amount.

A distribution is not free money added without effect to the fund. When value leaves the portfolio, NAV per unit normally falls by roughly the distribution amount, all else being equal. Check the payment source, amount per unit, eligibility date, tax treatment and reinvestment instruction, and assess it together with the change in NAV as part of total return.

A payment made from a company's profits to eligible shareholders.

Example: A company declares a ₦2 dividend per share, so an investor with 5,000 shares receives ₦10,000 before withholding tax.

A dividend is a payment a company makes to eligible shareholders, usually from profits or retained earningsCumulative profit kept in the business rather than distributed to shareholders.. The amount is commonly stated per share, and a company can increase, reduce or stop it.

If a company declares ₦2 per share and you are entitled to 5,000 shares, the gross dividend is ₦10,000. Any applicable withholding tax is deducted before the net amount is paid.

Four dates help explain the process: the declaration dateThe date on which a company formally announces a dividend or other distribution. announces the dividend, the qualification or record dateThe date used to determine which registered holders qualify for a distribution or corporate action. determines who is eligible, the ex-dividend dateThe first trading date on which a buyer is not entitled to the next declared dividend. marks when new buyers no longer receive it, and the payment dateThe date on which an approved dividend or distribution is paid. is when money is sent. Check whether your e-dividend details are current. A high dividend yieldAnnual dividend per share divided by the current share price. is not automatically attractive; confirm that earnings and cash flow can support the payment.

An internal rate of returnThe discount rate that makes a project's net present value equal to zero. calculation that uses actual dates for irregular cash flows, often called XIRR.

Example: The investor calculates XIRR for deposits made on different dates.

Extended internal rate of return, usually called XIRR, calculates an annualised money-weighted return using the actual dates of irregular cash flows. It is useful when deposits and withdrawals do not occur at equal intervals.

For example, an investor contributes ₦100,000 in January, ₦50,000 in April and ₦80,000 in November, then values the portfolio the following March. XIRR uses each date rather than pretending the contributions were evenly spaced.

XIRR shows the investor's personal annualised experience, not just the manager's performance. The result is sensitive to cash-flow signs, dates and the ending value, and unusual patterns can produce more than one mathematical solution or no useful solution. Check every input and compare it with time-weighted return when evaluating a manager.

The compounded average return per period.

Example: A 50% gain followed by a 50% loss has a negative geometric return despite a zero arithmetic mean.

Geometric mean return is the constant return per period that matches the compounded result of a series of returns. It accounts for the fact that each gain or loss applies to the value left by the previous period.

A 50% gain followed by a 50% loss does not return money to its starting point. ₦100 grows to ₦150, then falls to ₦75. The two-period geometric mean is about −13.4% per period, even though the arithmetic mean of +50% and −50% is 0%.

Use geometric mean for multi-period investment growth and comparisons over time. It is always no greater than the arithmetic mean for the same returns, and volatilityThe degree and frequency of price or return fluctuations. widens the difference. The periods must be consecutive and measured consistently.

Return before deducting fees, costs, or taxes under the stated convention.

Example: The strategy earns 15% gross before management fees.

Gross return is performance measured before some or all fees, costs or taxes are deducted. The word “gross” is incomplete unless the report states exactly which deductions are excluded.

A strategy may earn 15% before a 2% management feeThe recurring fee paid from fund assets to the fund manager for managing the portfolio. and other expenses. Its investor-level return will be lower, although subtracting percentages directly may only approximate the result because fees can be charged throughout the period.

Gross return can help assess the investments or strategy before costs, but investors cannot spend it. Check whether it is before management fees, trading costs, fund expenses and tax, and whether income is included. Compare gross with gross or net with net over the same dates; mixing conventions flatters the result with fewer deductions.

The length of time an investment is owned.

Example: The investor's holding period runs from purchase to sale.

The holding period is the length of time an investor owns an investment. It begins when ownership is acquired and ends when the investment is sold, redeemed or otherwise disposed of.

If units are bought on 10 March 2025 and redeemed on 10 September 2026, the holding period is 18 months. Additional purchases can have separate holding periods even when they appear in the same account.

Holding period matters because risk, charges and tax rules can depend on how long an asset is owned. A fund may apply an early-redemption charge, and some investments need more time to withstand price swings. A long holding period does not make a weak investment good, but the chosen investment should suit the time available.

Total gain or loss during the time an investment is held, including income.

Example: A ₦100 asset rises to ₦108 and pays ₦4, producing a 12% holding-period return.

Holding-period return is the total percentage gained or lost while an investment is owned. It includes the change in value plus income received during that exact period.

If an asset costs ₦100, rises to ₦108 and pays ₦4 of income, the holding-period return is 12%: (₦108 − ₦100 + ₦4) ÷ ₦100. If it instead ends at ₦94 after paying ₦4, the return is −2%.

Always state the start and end dates because a 12% return over six months differs from 12% over three years. Include distributions consistently and use net purchase and sale values when measuring the investor's actual result. Holding-period return is not annualised unless a separate annualisation calculation is performed.

The income rate reported by a money market fundA mutual fund that invests mainly in short-term, relatively liquid instruments such as treasury bills and deposits. under its stated calculation method.

Example: Two funds with similar portfolios may report different yields because their calculation periods differ.

Money market fund yield is the annualised income rate a money market fund reports using its stated calculation method. It changes as the income earned by the fund's short-term investments changes.

If a fund earns about ₦1,500 during one month on an average investment value of ₦100,000, the monthly rate is about 1.5%. Annualising that figure produces a much larger yearly percentage, but the investor will earn it only if similar rates continue and the calculation assumptions hold.

Compare yields only when the funds use the same period and method. Check whether the number is current or historical, simple or compounded, and before or after fees and tax. A displayed annualised yield is not guaranteed and should not be mistaken for the return already earned over a full year.

A return measure reflecting the timing and size of investor cash flows, equivalent to an internal rate of return.

Example: A large deposit before a decline lowers the investor's money-weighted return.

Money-weighted return measures the investor's personal result while considering the size and timing of deposits and withdrawals. It is the rate that makes all dated cash flows and the ending value balance, and is equivalent to an internal rate of return.

If an investor adds a large amount just before the portfolio falls, money-weighted return will be lower because more money experienced the decline. Adding the same amount after the fall would produce a different result even if the fund's time-weighted performance were unchanged.

Use money-weighted return to assess what happened to your own money. It is influenced by cash-flow decisions that a fund managerThe licensed firm responsible for investment decisions and day-to-day management of a fund. may not control, so time-weighted return is usually better for comparing managers. Accurate dates, amounts and the ending portfolio value are essential.

Return after specified fees, costs, or taxes.

Example: The fund reports 12.8% net after expenses.

Net return is performance after the deductions specified in the calculation. It is more useful than gross return only when the report clearly identifies which fees, costs and taxes have been removed.

If a fund reports 12.8% after its management fee and operating expenses, that is a net-of-expenses return. It may still be before the investor's withholding tax, brokerage cost or account fee.

Read the definition beside the number rather than assuming “net” means after everything. Check whether income, fund expenses, transaction costs and investor taxes are included. When comparing funds, use figures calculated on the same basis and over the same dates. Your personal net return may differ from the fund's published net return.

Return between one specified starting date and one ending date.

Example: The fund gained 40% from 1 January 2022 to 1 January 2025.

Point-to-point return measures the change in an investment between one specified starting date and one specified ending date. It gives one historical result for that exact pair of dates.

If a fund grows from ₦100 per unit on 1 January 2022 to ₦140 on 1 January 2025, its price return is 40%. Distributions paid during the period must be added if the aim is to calculate total return.

The result can change sharply when either date changes, especially after a market high or low. Always state the dates, whether the figure is cumulative or annualised, and whether it includes distributions and fees. Rolling returns are more useful when you want to see results across many different starting dates.

A gain recognised after an investment is sold or otherwise disposed of.

Example: Shares bought for ₦1 million and sold for ₦1.4 million create a ₦400,000 realised gain.

A realised gain occurs when an investment is sold or otherwise disposed of for more than its cost. The sale turns the increase in value from a changing market estimate into a completed transaction.

If shares bought for ₦1 million are sold for ₦1.4 million, the initial realised gain is ₦400,000. If buying and selling costs total ₦30,000, the gain after those transaction costs is ₦370,000 before any applicable tax.

Use the correct cost basisThe original investment cost adjusted for specified events such as fees, splits, or reinvested distributions. when purchases were made at different prices, and include relevant transaction costs. Keep contract notes and evidence of improvements or other allowable costs where applicable. A realised gain can create a tax obligation, but the treatment depends on the asset, investor and current law.

A loss recognised after an investment is sold or disposed of.

Example: The investor sells for ₦700,000 after buying for ₦1 million.

A realised loss occurs when an investment is sold or disposed of for less than its cost. Once the transaction is completed, a later recovery in the asset's price no longer repairs that investor's loss.

If an investment bought for ₦1 million is sold for ₦700,000, the realised loss is ₦300,000 before transaction costs. Selling costs can increase the loss, while income previously received belongs in a separate total-return calculation.

A realised loss does not automatically mean selling was a mistake; the investment may no longer suit the goal or its prospects may have worsened. Record the cost, proceeds, fees and date. Tax rules may allow some losses to offset certain gains, but eligibility and timing depend on current law.

Performance compared with a benchmark or another investment.

Example: The fund's 12% return is 3 percentage points above its benchmark.

Relative return shows how an investment performed compared with a benchmark or another investment. It is usually expressed as the difference between their returns over the same period.

If a fund returns 12% and its benchmark returns 9%, the fund's relative return is positive 3 percentage points. If the fund loses 5% while the benchmark loses 10%, its relative return is also positive 5 percentage points even though the investor still lost money.

Use the same dates, currency and return convention on both sides. Comparing total return with price return or net return with gross return creates a misleading result. Positive relative performance does not mean a positive absolute return, and the chosen benchmark must match the investment's actual mandate and risk.

Return measured over repeated overlapping periods of the same length.

Example: Five-year rolling returns show results for every five-year window.

Rolling return measures many overlapping periods of the same length. Instead of judging an investment from one chosen start date, it shows how it performed across every available window.

Five-year rolling returns might measure January 2015 to January 2020, February 2015 to February 2020, and so on. The collection reveals the best, worst and typical five-year experiences rather than one five-year result.

Rolling returns help show consistency and dependence on entry date. The windows overlap, so they are not independent observations, and strong historical ranges do not guaranteeA contractual promise by another party to meet an obligation if the primary debtor does not. future outcomes. Compare the same window length, frequency, dates and treatment of distributions for every investment.

A performance measure that removes the effect of external cash-flow timing.

Example: A fund manager's result is measured independently of when the client deposits money.

Time-weighted return measures an investment manager's performance while removing the effect of when an investor adds or withdraws money. It breaks the history into periods around each external cash flow and compounds the period returns.

Suppose a portfolio rises 10%, then the investor makes a large deposit, and the portfolio falls 5%. The time-weighted result combines the 10% and −5% investment returns without allowing the deposit itself to look like performance.

This method is useful for comparing funds or managers who do not control client cash-flow timing. It may differ from the return the investor personally experienced. Calculations need valuations around each cash flow and consistent treatment of fees and income.

The complete investment result from price changes plus income, assuming distributions are included.

Example: A fund gains 8% in unit price and pays 3% in distributions, producing an approximate 11% total return before compounding effects.

Total return measures the full result of an investment over a period. It includes both the change in price and any income, such as dividends, interest or fund distributions.

Suppose a fund starts at ₦100 per unit, ends at ₦108 and pays a ₦3 distribution. An investor has gained ₦8 from the price and ₦3 from income, giving an 11% total return before any reinvestment effect, fees or tax.

Use total return when comparing investments that pay different amounts of income. A price-only return can make an income-paying investment look weaker than it was. Compare the same dates and the same treatment of distributions, fees, tax and currency. For a personal portfolio with deposits or withdrawals during the period, a cash-flow-aware method may be needed.

Share-price change plus dividends over a period, assuming the stated treatment of reinvestment.

Example: A share rises 10% and pays a 4% dividend, producing roughly 14% TSR before interaction effects.

Total shareholderA person or entity that owns one or more shares in a company. return, or TSR, measures what a shareholder gained from both the change in share priceThe market price at which one share is quoted or traded. and dividends over a period. It is the equity version of total return.

If a share starts at ₦100, ends at ₦110 and pays a ₦4 dividend, TSR is 14% before costs and tax when the dividend is not assumed to earn an additional return: (₦110 − ₦100 + ₦4) ÷ ₦100.

State the dates and how dividends are treated. A published index may assume dividends are reinvested, which can produce a different result from simply adding them. TSR helps compare growth and dividend-paying companies fairly, but it does not show how risky the journey was or whether future returns will match the past.

Return measured backward from a stated end date over a fixed period.

Example: The factsheet reports trailing one-year and three-year returns.

Trailing return measures performance backward from one stated end date. Common factsheet figures include trailing one-year, three-year and five-year returns ending on the report date.

If a factsheet dated 30 June 2026 shows a trailing one-year return, it covers 1 July 2025 through 30 June 2026. A trailing three-year figure covers the three years ending on that same date and is often annualised.

Trailing returns are easy to compare at one point in time, but each figure depends heavily on its chosen end date. Check whether multi-year returns are annualised, whether distributions and fees are included, and whether all investments use the same dates. Rolling returns give a broader view across many possible end dates.

An increase in value on an investment that has not been sold.

Example: A shareholding worth ₦1.4 million against ₦1 million cost has a ₦400,000 unrealised gain.

An unrealised gain is an increase in an investment's value while the investor still owns it. It is sometimes called a paper gain because no sale has locked in the amount.

A shareholding bought for ₦1 million has a ₦400,000 unrealised gain when its current market valueThe price at which an asset could trade in the market at a given time. reaches ₦1.4 million. If the value falls to ₦1.1 million before sale, the unrealised gain falls to ₦100,000 without any cash changing hands.

The quoted market value may not equal what a large or illiquid holding could actually be sold for. Track unrealised gains when measuring wealth and portfolio risk, but do not treat them as spendable cash. Tax is commonly linked to disposal, although the applicable rules should always be checked.

A decline in an investment's value before it is sold.

Example: The market value falls below cost, but the investor still holds the asset.

An unrealised loss is a fall in an investment's value below its cost while the investor still owns it. The loss can grow, shrink or disappear as the market price changes.

If shares bought for ₦1 million are currently worth ₦700,000, the holding has a ₦300,000 unrealised loss. The loss becomes realised if the shares are sold at that value. Continuing to hold does not guarantee that the price will recover.

Judge the investment using its current prospects, risk and role in the portfolio, not merely the desire to get back to the purchase price. For assets that trade infrequently, the displayed or estimated value may not be achievable in a sale. Include unrealised losses when assessing net worthTotal assets minus total liabilities. and portfolio exposure.

The investment return from the start of the current calendar year to the stated measurement date.

Example: A unit price rising from ₦10 on 1 January to ₦10.80 gives an 8% price return year to date.

Year-to-date return, or YTD return, measures performance from the start of the current calendar year to a stated date. It resets each year and covers a shorter period when measured earlier in the year.

If a unit price was ₦10 at the previous year-end and is ₦10.80 on the measurement date, its YTD price return is 8%. If the fund also paid a distribution, that must be included to calculate YTD total return.

Always state the measurement date. A YTD figure reported in March cannot be compared fairly with one reported in September as though both cover the same period. Check whether the figure includes distributions and fees, and separate investment performance from money added or withdrawn during the year.

Income from an investment expressed as a percentage of its price, value, or principalThe original amount of money invested or lent, excluding later returns..

Example: An investment paying ₦12,000 annual income on ₦100,000 has a 12% simple yield.

Yield expresses an investment's income as a percentage of a stated amount, such as its price, value or principal. It helps compare income, but the exact formula depends on the investment.

An investment paying ₦12,000 a year on a value of ₦100,000 has a 12% simple yield. For a share, dividend yield usually compares annual dividends with the share price. Bond current yieldAnnual coupon income divided by the bond's current market price. compares annual coupon income with market price. Money market funds may quote an annualised yield using another method.

Always identify which yield is being quoted. It may be historical or expected, gross or net of tax and fees, and simple or compounded. Yield does not include every price gain or loss and is not the same as total return. An unusually high yield can reflect a falling price or greater risk rather than a better opportunity.