I understand what those terms mean, however I am puzzled by why they are so different in value, for example: EURO STOXX 50, the net return is quoted at: 6979.38, while the gross return version is quoted at: 1,344.57

If both indices reflect full capital reinvestment, how come the net return has much higher nominal value?

Both must have started at 1000 points at the same time, if anything, I would have expected the gross return to be higher, because it does not reflect deduction of taxes

  • The numbers that you are citing (6,979.38 and 1,344.57) are the closing values (last trade) not the net return or the gross return – Bob Baerker Jul 1 '18 at 16:24
  • "Both must have started at 1000 points at the same time" Why? – D Stanley Jul 2 '18 at 13:40
  • @BobBaerker OP is comparing the Gross Return and Net Return (return after dividend taxes) versions of the index. – D Stanley Jul 2 '18 at 13:50
  • @ D Stanly - Thanks, I misunderstood the question. @Ekiy Arlev - If the two indexes have provided similar returns and the constituents are substantially similar, then the indexes had different starting values. Try to find historical data for each. Or, if the 1/5/10 year returns are similar, that's also indicative of differing starting values. – Bob Baerker Jul 2 '18 at 15:12

Both must have started at 1000 points at the same time

This is not true. Looking at the history of both, the Gross Return index goes back to Jan 1, 2001, where it had a closing value of 988, while closing value of the Net return index on that date was 5,957.

As with most indices, the value is relative only to its starting date and value. You cannot directly compare indices which have different calculation methods or start on different dates. Instead, you should compare their return over a given period.

  • Indeed my assumption that they had started at the same time was not correct. The Net Return Version goes since 1986 while the gross return since 2000 – Eliy Arlev Jul 4 '18 at 11:50

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