Annualised Return

Annualised Return is nothing but the average annual return. It indicates the return gained (on an average) each year of a multi-year period.

It is a hypothetical rate of return that, if achieved annually, would have produced the same cumulative return if performance had been constant over the entire period.

If the annual return of a fund for a three-year period was 25%, but over 10 years it was only 10%, it is obvious that the results of the last three-years are quite different from the long-term track record of the fund.

A good fund is one that has produced consistent annualised returns over varying periods of time.