Show 

Geometric Mean

Represents the annualized total return for a fund over 3-, 5, and 10-year time periods.

Benefits

Origin

Morningstar calculates this figure in-house, using a geometric average. The formula for the geometric mean is [image\ebx_330890462.gif] x 100

Where:

n = number of months

Cumulative total return = image\ebx_3884380.gif

For the Pros

Investors have varying degrees of risk tolerance, yet they will always seek the maximum rate of return available on their investment. Mean is also commonly referred to as expected return, and is what an investor hopes to maximize for any given measure of risk.

A Note About Standard Deviation

Morningstar uses the arithmetic mean of a fund rather than the geometric mean above to calculate standard deviation. Thus, the standard deviation figures Morningstar provides in our database can not be calculated using the mean figures listed. See the definition of standard deviation for a more complete explanation.