What does recapture rate represent in terms of investment returns?

The recapture rate represents the percentage of an investment's returns that are recaptured after an initial loss or decline. This concept is particularly significant in the context of investments that have experienced a downturn, where investors want to assess how much of their previous gains can be regained after a recovery period.

When discussing investment returns, the term "of" in this context emphasizes the relationship between the total returns and the portion that is being recaptured. It indicates that the recapture rate is calculated based on specific returns that were initially experienced before any losses. The recapture rate essentially quantifies the effectiveness of the recovery process and reflects the investor's ability to regain their initial investment or profits, thereby showcasing the resilience of the investment strategy or market conditions.

Understanding recapture rates helps investors make more informed decisions regarding their portfolios, particularly when strategizing about the timing of potential reinvestments or reallocations following market fluctuations.