CAGR, or Compound Annual Growth Rate, measures the mean annual growth rate of an investment over a specified period longer than one year, assuming profits are reinvested. It smooths out volatility to provide a single annualized return figure, making it easier to compare the performance of different investments or portfolios over time.
Example
“The fund delivered a CAGR of 12% over the past decade, outperforming the S&P 500 benchmark.”