What is a Total Return Index?
The total return index is a tool that is used to calculate the overall performance of a selected group of stocks. Part of the criteria for the stock performance is the assumption that all distributions and dividends associated with the stocks are reinvested. This approach is considered to provide a more complete picture of the actual return, or lack thereof, that is ultimately obtained by the performance of the stocks involved. There are several reputable indexes in common use today. The S&P 500, issued and updated by Standard and Poor, is often considered the standard for calculating a total return index. However, there are two other commonly employed indexes that are often consulted in tandem with the S&P 500, as well as used independently. Both the Russell 2000 and the Wilshire 5000 are readily available for review. One of the advantages of consulting more than one total return index is that the three leading indices in use today do not always totally agree on the performance level
