CAPITAL RETURN: The portion of a Total Return generated by realized and unrealized gains and losses.
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
- This term is not new at all!
- What is however different is its broader redefinition in the Exposure Draft by dropping its direct reference to real estate returns only.
- It now applies to that component of returns for any type of asset class. This is how it should be!
- 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.
- 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.