Growth Of 10K

Growth of 10K is a chart that highlights the change in value of an initial $10,000 investment in a financial asset during a given period of time, which is often since the asset's inception or during the 10-year period since its most recent fiscal year end.  The growth of 10,000 graph usually compares the returns of various investments, either relative to each other or versus an underlying benchmark index. The asset returns shown in growth of 10K exhibits typically include the reinvestment of dividends and capital gains, but they mostly exclude any fees and sales charges that investors may incur. Mutual fund companies are significant users of growth of 10K charts and feature them prominently in marketing materials.

Growth of 10K charts are a staple of mutual fund annual reports, and nearly all fund companies post interactive growth of 10K charts on their websites. These enable investors to visually compare the performance of hypothetical $10,000 investments in multiple funds and their benchmarks over various periods of time. If an investor wishes to compare the performance of two or more funds since their inception, the starting comparison point should go back far enough to include the launch of the oldest fund.

While the growth of 10,000 chart is a handy and popular tool for comparing investment performance, it has some limitations. Since it usually excludes fund management fees and other costs including sales and redemption expenses, the growth shown is often overstated. Thus, the actual returns an investor would have received during the period in question would likely be lower than those shown.

An investor should also consider the effect of volatility when making an investment decision, but the chart is of limited use in this regard. For instance, a $10,000 investment in Fund A may have grown to $15,000 over five years, while Fund B may have increased to $16,000 during the same time frame but with considerably more volatility. Despite its lower return, Fund A may be more suitable or desirable for conservative investors who prefer a less volatile investment.

According to the SEC, each mutual fund annual report must include a “line graph comparing the performance during the last 10 years, or for the life of the fund, if shorter, of a hypothetical $10,000 initial investment against an index.” Although not compulsory, most semiannual shareholder reports also feature a growth of 10K chart. In either case, a brief look at the chart will reveal whether the fund’s performance has been steady or turbulent during the past 10 years or life of the fund. A choppy line with multiple peaks and valleys shows that the fund has had considerable variations in performance, while a gradual slope indicates a more stable return during the period.