Total Return

The total return on an investment includes interest, capital gains, dividends, and distributions realised over a given period of time. Therefore, Total Return strategies may be appropriate for investors seeking both current income and capital appreciation, through investment growth.

Traditional bond strategies, such as high yield and investment grade, typically focus more on yield and seeking to generate an income while preserving the initial investment. Total Return includes both income and appreciation of capital. Total Return investors typically focus more on the growth in their portfolio over time than on the yield in a given period. They will take distributions as needed from a combination of the income generated from the yield on various holdings and the price appreciation of securities.  Investors should understand the key  differences between yield and total return so their portfolios are constructed to meet income-generating needs while providing a level of growth. 

Duration is one of the fundamental characteristics of a bond, used to assess the sensitivity of a bond’s price to changes in interest rates.

A yield curve is a line that plots the yields or interest rates of bonds that have equal credit quality but different maturity dates. It can be used as a benchmark for other interest rates in the market, such as mortgage rates and bank lending rates, and investors can use the yield curve to make investment decisions that factor in the likely direction of the economy.

Currency risk is the risk that investment performance may be adversely affected by variations in the exchange rates between the base currency of a portfolio and the currencies in which the investments are made.

Investments in Total Return strategies can be made by either investing in actively managed mutual funds or exchange traded funds (ETFs). Invesco offers a broad range of actively managed Total Return funds and ETFs.