Measuring Investment Performance Accurately

A total return Indices accurately measures the performance of the index. It gives investor actual idea of the return on investment that he takes home.

The high Dividend index serves as benchmark for income seeking equity investors. The index seeks to measure the performance of high yield companies. This index contains group of companies who investors believes that it pays higher dividend.

A Smart beta is an investment strategy designed in a way to add value strategically choosing, weighing and rebalancing the index containing companies that is based on the investor's objective factors. Smart Beta strategy opens the horizons of the investments option available to particular investors and it should be quantitatively and objectively evaluated based on the objectives of the investor and the duration of the time for which he has invested and seeking returns on it.

The index fund purpose is to mirror the activities or growth of the index that functions as its benchmark. A total return index takes into account not just the price returns of the stocks but also dividends paid out on the stocks. It serves primarily as benchmark for comparing fund performance. The total return also includes interest, capital gains, dividends, distributions realized over a period of time as a matter of fact.

The calculations of the index returns are on the basis of the interval on two different point of time. The very first step is to calculate the price level of the index on the first and last day of the trading period you are evaluating.

Total return indices reflect the total earning of the investor in totality. It gives actual earning of the investor what they will take home. It also becomes relatively easy for the investor to clearly depict the benefits or return on investment.

Total return indices are basic tool of an investment manager to ascertain performance of the components of the group supposing that all other cash distribution is reinvested altogether. Total return indices are therefore being a totality in itself as it includes dividends, interests, rights offerings and other distribution realized over a period of time which is a most accurate measure of the performance.

Source : https://agriculturetrindex.blog.fc2.com/blog-entry-7.html