Total return
The complete return from an investment — income plus capital growth — rather than price movement alone.
Total return combines every source of return: dividends or distributions received, franking credits where applicable, and the change in the asset's price.
Looking at price alone badly understates the return from Australian shares, where dividend yields are high by global standards and franking adds further value.
Index charts often come in two versions. A price index shows only capital movement; an accumulation index assumes income is reinvested and shows the far higher total return.
Total return is also the correct basis for comparing asset classes. Property returns quoted as price growth alone omit rental income, while share returns quoted on a price index omit dividends, so comparing the two on different bases produces meaningless conclusions.
Price versus total return
A share rising from $40 to $42 while paying a $2 dividend returns 5% in price terms but 10% in total return terms — double the apparent result.
The bit people get wrong
Comparing a price index against a fund's total return makes the fund look artificially good. Always compare like with like, using accumulation figures on both sides.
Common questions
Should I focus on income or growth?
Total return is what builds wealth. Chasing income alone can lead to concentrated, low-growth portfolios, while ignoring income overlooks a large share of Australian equity returns.
Do franking credits count in total return?
For an Australian resident they add real after-tax value, and grossed-up return measures include them. Many published figures do not, so check the basis.
How do fees affect total return?
Published fund returns are usually net of management fees but before your own tax and brokerage, so your personal return is generally lower.