Fund Analysis

A fund's performance can be illustrated with a  Trend Graph ; showing how a  fund  responds in different market conditions.   This presentation of a fund's performance more readily identifies a change in a fund's fortunes than figures alone.

The Trend Graphs  that follow show how a fund has performed over a series of 49, 1 year investment periods, taken at one-month intervals. Therefore the analysis of a lump sum investment would normally cover the last 5 years of past performance. 

• Historical performance is to the left and current performance to the right of the graph. 
• White bars are periods of negative and green positive returns. 

Fund

So, how can we tell whether the manger of the fund (above) has created additional value for the investor?   By looking at what the average fund has achieved over the same period (below) we can see a very similar performance profile.

Average Fund

Then, by subtracting the Average Fund's return from the Fund's Return we can see the value added by the Fund Manager.

In this instance the fund closely follows the performance of the Average Fund; with no discernable additional wealth created by the fund's manager. 

For the following graphs we have already subtracted the Average Fund's return and are presenting only the value added, or lost by the fund's manager.  

They should be interperated by comparing the graph with the Average Fund's graph and seeing how a fund performed when the Average Fund was making or losing money.

Unfortunately, many fund managers are producing investment returns which are consistently below average.  The following graph shows a fund consitently under-performing the Average Fund in both favourable and unfavourable market conditions.

Consistent Under-Performance

The next fund has a ‘Geared’ performance; as it out-performed the Average Fund in favourable conditions and under-performed the Average during unfavourable conditions.

Geared

However, the following 'low Risk' fund performed well in adverse conditions, while only marginally under-performing the Average Fund during positive conditions. 

Low Risk

What we are looking for is the following fund profile, where the fund's manager has created additional returns for the investor during both positive and adverse conditions. 

Value Added All Market Conditions

To ensure a valid comparison can be made between funds, the Association of British Insurers (ABI) group funds together within Sectors.  We therefore use an average of the funds within the same Sector as the fund we are analysing.

Fund Performance Analysis is performed by Figaro for the five year period ending 31 January 2010, on data supplied by Morningstar. Whilst Figaro take great care in compiling the figures and information shown, no liability can be accepted for any error or omission.

Past Performance is not necessarily a guide to future performance.