Compound Monthly Return (Geometric)

The monthly average return that assumes the same return every period that results in the equivalent compound growth rate from the actual return data. The geometric mean is the monthly average return that, if applied each period, would produce a final dollar amount equivalent to the actual final value-added monthly index (VAMI) for the fund’s return stream. (The VAMI reflects the growth of a hypothetical $1,000 in a given investment over time, with the index equal to $1,000 at inception.)

Compound Monthly Return

Investors who are required to select and monitor investment managers should develop a basic understanding of investment statistics. Quantitative tools can provide you with good insight that you can use in your qualitative interviews with managers and when monitoring your investments.