Price return
The price return is the rate of return on an investment portfolio, where the return measure takes into account only the capital appreciation of the portfolio, while the income generated by the assets in the portfolio, in the form of interest and dividends, is ignored. This contrasts with the total return, which does take into account the income generated in the portfolio.
Often, when the return of a stock market index is quoted in the press, the quoted returns concern price returns, rather than the total returns. Examples are the S&P 500 and the MSCI EAFE, which are typically quoted in terms of price return. This is clearly misleading, since, economically speaking, it is the total return that is the only thing that matters. Whether that return is generated in the form of cash income or in capital appreciation is irrelevant as long as one can always liquidate the investment to realise the capital appreciation into cash.
For the same reason, it is inappropriate to evaluate the skill of a portfolio manager by comparing the total return on the portfolio to the price return of an index. After all, the total return on the index will always exceed the price return on the same index, so the portfolio manager could simply outperform the price return of the index by investing in the index. Even so, the use of price indices is still quite common in the investment industry.
Podcasts:
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by Beth Orton
Paris Train
by: Beth OrtonNow your sitting on a Paris train, laughing at your own jokes again
Sun splits the trees into beautiful broken light
Never cry more tears than you could hold in your hands
When all the world's airbrushed, it's a sacred bond of trust
Sometimes, sometimes I see right through the scenery
The first place that's on my mind
The last place I find each time
Sometimes, I swim beyond the scenery
The last place that's on my mind
The first place I find each time
Now I'm sitting on a Paris train, molten ash falls like rain
Fire burns the trees, it's a beautiful fatality
Love the way you stand your ground, sea moves as mercury
To break its perfect skin to dare to dive within
Sometimes, sometimes I see much more than is good for me
The first thing that's on my mind
The last place I'd look each time
Sometimes, I slip inside the imagery
And the last thing that's on my mind's
The first thing I'll do each time
Each time, each time
The stars racing to burn out
Just stars racing to burn out
A storm waiting to break
Trees standing black against the sky
This was inevitable, this was inevitable
Sometimes, sometimes we can see beyond our history
The last place you hope to find
The one that's been there all the time
Sometimes, sometimes we can swim beyond the scenery
And the first place that's on your mind
The first place you'd find each time
Each time, each time, each time, each time
The stars racing to burn out
A storm waiting to break