Absolute Percentage Growth - Explained
What is Absolute Percentage Growth?
Written by Jason Gordon
Updated at October 10th, 2021
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What is Absolute Percentage Growth?
An Absolute percentage growth refers to the rate of increase in the value of an asset. It refers to the appreciation in value of an asset or stock displayed as a percentage. It is also called absolute return or absolute growth. This representation of increase in value is not in relation to another asset, it is just a representation of increase in the value of an asset. Some people might be confused with the usage of absolute percentage growth because ordinarily, absolute connotes a sense of totality. However, absolute percentage growth simply shows an increase in the value of an asset over a period of time.
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How Does Absolute Percentage Growth Work?
When calculating the absolute percentage growth of an asset, no comparison is done between the value of the asset which might be a benchmark in the market. Rather, the absolute percentage growth of an asset is the percentage of increase that can be attributed to the asset over a period of time. In the investment industry, performance is measured using difference means, for instance, different market types have distinct benchmarks used in evaluating the performance of other assets in the market. The percentage of increase in funds are often tracked and measured against other funds using the yardstick in the market, the market index. A mutual fund up to 30% in a year has a relatively good return. Most times, growth is measured on a relative basis. While institutional investors place more importance on relative returns or growth, real investors consider the absolute growth or returns.