#5 Capital Return

CAPITAL RETURN: The portion of a Total Return generated by realized and unrealized gains and losses. Click to Tweet

Full Definition

This term is defined as The portion of a TOTAL RETURN generated by realized and unrealized gains and losses.” in the GIPS 2020 Exposure Draft.

Key Points about This Term

  1. This term is not new at all!
  2. What is however different is its broader redefinition in the Exposure Draft by dropping its direct reference to real estate returns only.
  3. It now applies to that component of returns for any type of asset class. This is how it should be!
  4. Fun Fact – It appears two (2) times in the Exposure Draft, all in the definitions section with a direct relationship to its parent term, Total Return.
  5. Possible Evolution under new Standards – This one is here to stay, especially in this expanded form inline with the universal application focus of the new Standards.