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Historical Returns

Historical returns represent the past performance of an investment, showing the percentage gain or loss over a specific period.Investors use historical returns to assess the potential risk and reward of an asset, although past performance is not necessarily indicative of future results.Historical return data is commonly used for stocks, bonds, mutual funds, and other securities, helping investors analyze trends, volatility, and overall performance over time.

Example

A stock delivered an average annual historical return of 8% over the past five years, helping investors evaluate its long-term performance relative to other investments.

Key points

• Reflects the past performance of an investment over a specific period.

• Used to assess potential risk and reward, but not a guarantee of future results.

• Helps investors analyze trends, volatility, and performance over time.

Quick Answers to Curious Questions

Historical returns provide insights into an asset’s performance, helping investors gauge potential risks and rewards based on past trends.

Historical returns may not predict future performance, especially in volatile or changing market conditions, limiting their reliability for future decision-making.

Investors use historical returns to diversify portfolios, optimize asset allocation, and assess the potential risk-reward balance of different investments.