Applying a linear trend line to the value added monthly index gives a better estimate of returns than compound annual growth rate. It differentiates between different return distributions and is less affected by noise.
Focusing on CAGR is a mistake unless you are aware of its limitations. We take a closer look at Compound Annual Growth Rate, to see what it leaves out, and how it can be affected by chance.
Learn how to take a closer look at Value Added Monthly Index with this simple hedge fund hack using a logarithmic chart axis.