Monday, 21 January 2013

A Guide Towards Understanding Unit Trust Performance Table

Let's begin by looking at a sample Unit Trust Performance Table shown below:

Definition according to the number tagged in the picture above:

( 1 ) Fund Name
Duh! Basically this refers to the name of a specific Unit Trust Fund. 

( 2 ) Fund Price
When investing in Unit Trust, we are in fact purchasing "units" based on the fund's price. Fund price changes on a day to day basis based on the calculation which I will explain next.

Determining the Fund Price
Fund price also commonly known as the Net Asset Value (NAV) per unit is calculated by adding up the current value of all the stocks, bonds, and other securities (including cash) in the fund's portfolio, subtracting out certain daily expenses of running the fund (e.g the management fees, trustee fee, and other operating expenses) and then dividing that figure by the fund's total number of units. A fund price is always calculated at the end of each business day. 

For example, Fund X intends to calculate the fund price per unit at the end of a business day with the following information:
a) Asset at end of business day : RM48,200,000
b) Liability at end of business day : RM200,000
c) Total number of units : 80,000,000 units (referring to the units purchased by investors)

Fund price per unit : (RM48,200,000 - RM200,000) / 80,000,000 units = RM0.60/unit

On the following business day, investors can then purchase units from this fund at the price of RM0.60/unit.

( 3 ) Fund Manager
The organization / company responsible for implementing a fund's investment strategies and managing its portfolio trading activities. If you read deeper into a Unit Trust Fund prospectus you will also find the individual / person in charge of managing your fund.

( 4 ) YTD (%)
YTD is short for Year To Date. YTD (%) is the percentage difference between the Fund Price on the last day of last year to the Fund's latest closing price.

Sample calculation as follows:
a) Fund Price for ASM Balanced Fund on 31 Dec 2012 : RM0.7296 /unit
b) Fund Price for ASM Balanced Fund on 18 Jan 2013 : RM0.7319 /unit

% Year To Date : (RM0.7319 - RM0.7296) / RM0.7296  X 100% = 0.32%

When looking at YTD (%), we are comparing the latest performance of the fund against the benchmark price of the previous year. 

( 5 ) 1 mth (%), 3 mth (%), 6 mth (%) and 1 yr (%)
Somewhat similar to YTD (%), but with a little twist to it. For example when looking at the performance table of Unit Trust as of 15th January 2013, the 1 mth (%) is the percentage difference between the fund price on 15th January 2013 with the price of the same fund a month ago (15th Dec 2012). 

3 mth (%) : Percentage difference between the price on 15th January 2013 with price on 15th Oct 2012
6 mth (%) : Percentage difference between the price on 15th January 2013 with price on 15th July 2012
1 yr (%) : : Percentage difference between the price on 15th January 2013 with price on 15th January 2012

( 6 ) 3 yrs (%) and 5 yrs (%) annualized
When investing into unit trust, we should be aware that performance of a fund varies from year to year. Profits and losses are indicated by the comparing the percentage difference of the fund's NAV for one financial year to the previous financial year. Different funds have different financial year end and should not to be confused with our normal calender year end of 31st December.

Here's a sample Annualized Returns for a fund: 

Referring to table row for "Jumlah Pulangan (%)", we see that as by financial year end 30th November 2011, this fund posted 3.17% growth on NAV from the previous financial year. For 2010, the growth is 12.60% and 21.96% for 2009. During the 2008 economy downturn, the fund posted -17.96% losses from its previous year NAV. Clearly profit and loss for any unit trust fund tend to vary from one financial year to the other.

To compare funds using actual year performance such as the one above is rather difficult due to different financial year of each unit trust fund. Furthermore, yearly comparison does not reflect the overall objective of evaluating the long term performance of a unit trust fund.

Hence when it comes to comparing performance of unit trust funds for duration longer then one year, each unit trust performance are "annualized" to reflect the average performance per year of a fund with reference to a specific date.

For example, whenever you read or hear that a fund returns 10% over a period of 3 years (%) annualized as of 31st December 2012, the information should be perceived as average 10% returns every year measured on the 31st of December for the past 3 years..

5 yrs (%) annualized is similar to the 3 years concept except that the duration of average returns is over a period of 5 years.

( 7 ) Shariah Compliant
A shariah compliant fund is denoted by "Y" and a non-shariah compliant fund is denoted by "N".

What is Shariah Compliant Fund?
Shariah compliant funds must invest according to the Shariah law as well as abide to the guideline of Islamic Finance. Shariah compliant funds provide an opportunity for our fellow Muslim friends to partake in unit trust investment without worrying if profits are obtained from non-halal sectors such as gambling and liquor.


#17th March 2013: Additional Information for Understanding Unit Trust Performance Table

a) Funds are divided into 4 Main Categories consisting of:
  • Asia Excluding Japan
  • Equity Malaysia
  • Greater China
  • Fixed Income (Malaysia)
b) All funds are ranked according to their Average 5 Year Returns (Annualized). 

c) Movement of funds on the ranking table are indicated by the colored bars below:
Fund movements are determine by comparing their previous ranking.

d) Apart from the Top 10 Unit Trust Performing Table, there is also another table that shows the Best Performing Fund according to Gain/Loss within a 2 week period. The Best Performing Fund According to Gain/Loss within a 2 week period allows investors to monitor:
  • The previous ranking and current ranking table in order to ascertain which fund is consistently performing (as indicated by the red box in the sample below).
  • The average 2 Weeks Gain/Loss in Percentage. This signifies the overall average performance of all 10 funds in a particular category (as indicated by the blue box in the sample below).


Cheers and happy investing!

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  1. Under (2) Fund Price why did you divide Asset - Liability with 80 million units instead of 8 million ?

  2. Hi there Anonymous, thanks for the heads up. I made a mistake and yes you are right. The Asset-Liability should be 80 million units instead of 8 million. Already made the amendment. Thanks!

  3. Hi Shane, so unit trust companies use average returns instead of compound annual growth rate when advertising their funds?