Gross return
Return before management fees, custody and other administrative costs are deducted, though after trading costs. It measures the manager's investing, not what the investor received.
Where you will meet it
Gross return appears in 3 learning outcomes on the CFA syllabus. A few of them:
- Contrast gross with net, pre-tax with after-tax, and real with nominal returns
“Gross return is before management fees and costs; net return is after them.”
- Identify the sources of income and the costs that arise when holding and running an equity portfolio, and explain how each affects performance
“Net return equals gross return plus income minus all of these costs, so high turnover or a heavy fee structure can erase any stock-picking skill.”
- Discuss what investors should assess when allocating to each kind of alternative investment
“Evaluate fees, including management and performance fees and their structure, since they take a larger share of gross return than in traditional assets.”
See also
Practise it
Practise gross return until it is automatic: questions that explain every wrong option.
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