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BabaRoga_space

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28/06/23

14:36

Post #: 68514673
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Originally posted by Recherche: ↑

I can't help someone who has no wish to understand.
Please research the term "accumulation index"

This may help you ;-
An accumulation index of share prices, also known as a total return index, is a type of stock market index that takes into account not only the changes in the prices of the constituent stocks but also the reinvestment of any dividends or other distributions received from those stocks. In other words, it measures the total return an investor would have earned from holding a portfolio of stocks over a specific period, including both capital appreciation and dividends.
Unlike a price index, which only reflects changes in stock prices, an accumulation index provides a more comprehensive measure of the overall performance of a stock market or a specific set of stocks. It accounts for the income generated by the stocks in the index, assuming that any dividends or distributions are reinvested back into the index constituents. This reinvestment factor distinguishes accumulation indexes from other types of indexes, such as price indexes or dividend indexes.
Accumulation indexes are often used as benchmarks to evaluate the performance of investment portfolios or to track the performance of specific market segments. They provide a more accurate representation of the returns an investor would have achieved by reinvesting dividends, making them useful for assessing the total return potential of a particular investment strategy or comparing the performance of different investment options.

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normally: accumulation index is used to measure relative performance between 2 stocks, investments.
For example:
Stock A does dividends, share buybacks, etc. The stock B does not.
When one looks at price index only: stock B might seem to have outperformed stock A, over 5 or 10 year period.
When accumulation index is applied it may show that stock A has actually significantly outperformed stock B and thus is much better investment option.

Having said that: having accumulation index compare to price index on same stock, at specific point in time - completely useless IMO.
Anyone that got dividends already knows they got dividends

PLS Price at posting: $4.82 Sentiment: None Disclosure: Held
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