Compound Annual Growth Rate (CAGR)

general

CAGR represents the mean annual growth rate of an investment over a specified period longer than one year. It smooths out the year-to-year fluctuations to show a steady rate of return. CAGR is calculated as (Ending Value / Beginning Value)^(1/Years) - 1. It is useful for comparing the performance of different investments over the same time period.

Related Terms

Compound Interest Total Return

See this concept in action → ETF Comparison