Absolute return is the total percentage gain or loss on an investment over a period — without annualising or adjusting for the holding period length.
Absolute return is the simplest return measure: (Current Value − Purchase Value) ÷ Purchase Value × 100. It tells you the total gain or loss as a percentage, regardless of how long the investment was held. It doesn't factor in time — a 50% absolute return over 10 years is very different from 50% over 1 year. Absolute return is useful for very short periods (under a year) where annualising can give misleadingly large or small numbers.
If you invested ₹10,000 and now have ₹12,000 — your absolute return is 20%. Simple. The problem: this doesn't tell you if it took 6 months or 6 years to earn that 20%. That's why CAGR (annualised return) is usually more informative for periods longer than 12 months.
Absolute return = (Ending value − Starting value) ÷ Starting value × 100.
For periods under 1 year, absolute return is appropriate.
For periods over 1 year, convert to CAGR for a fair comparison.
Mutual fund performance factsheets show both absolute (for <1 year periods) and CAGR (for 1 year+).
Absolute Return (%) = [(V₁ − V₀) ÷ V₀] × 100