Assessing Mutual Fund Performance

[Stockbear]

As some of us are interested in mutual funds, a recent article in the BusinessDay provides guidance as how to assess a mutual fund's performance.

Owing to server space constraints, I am unable to attach the actual document, nor provide a web link as one does not exist.


Absolute Returns

The absolute return of a mutual fund investment is the percentage difference between the value of your investment at the beginning of the year and the value at the end of the year.

This tells you about your (ROI) return on investment, but inappropriate for assessing how poor or good, your fund manager has managed investment in the period.

Choosing an appropriate benchmark is essential to assessing the performance of your investment. An appropriate benchmark should be measurable, consistent and independent of your fund manager. A good benchmark is the NSE (Nigerian Stock Exchange).

A benchmark is a group of unmanaged securities or measurable index whose performance is used as a standard to measure investment performance. The following benchmarking methods can be used.

Indices

Peer Groups

Time Period

Guys, there's too much to write. Anyone interested should PM me and I'll send actual article via email.

[lokwe]

Originally Posted by Stockbear

As some of us are interested in mutual funds, a recent article in the BusinessDay provides guidance as how to assess a mutual fund's performance.

Owing to server space constraints, I am unable to attach the actual document, nor provide a web link as one does not exist.


Absolute Returns

The absolute return of a mutual fund investment is the percentage difference between the value of your investment at the beginning of the year and the value at the end of the year.

This tells you about your (ROI) return on investment, but inappropriate for assessing how poor or good, your fund manager has managed investment in the period.

Choosing an appropriate benchmark is essential to assessing the performance of your investment. An appropriate benchmark should be measurable, consistent and independent of your fund manager. A good benchmark is the NSE (Nigerian Stock Exchange).

A benchmark is a group of unmanaged securities or measurable index whose performance is used as a standard to measure investment performance. The following benchmarking methods can be used.

Indices

Peer Groups

Time Period

Guys, there's too much to write. Anyone interested should PM me and I'll send actual article via email.

i am interested

[oseitutu]

Hi there. Now I want us to take this discussion further. I know it has been a while since you posted this thread. What is the jist of that article. And it seems server can accommodate it now?

[paragon]

i do not really like mutual funds because you do not really get value for your money. There is no flexibility in the trading pattern of these managers, as they are mandated to invest particular percentages in specified money market products.

For me, it is for people that are looking for security, and this copmes with low yield. Low yield cannot get me rich and i want to be rich and financially free.

[oseitutu]

Paragon I see where you are coming from, but you ahve to hedge. If all your money is in the stocks you are trading, that is also putting all your eggs in one basket. If you use 70% of your money to try to get rich, the difference may be much but eventually you will be rich. At the same time you are 30% insured in mutual funds. The IBTC fund has not been able to keep up with NSE this year, but it has a good past record. Putting aside 10% of your capital gains every year in a good mutual fund is a good idea, if you ask me.

[Stockbear]

Here's the article from BusinessDay

[bwalaman]

In Nigeria's investment environment, if you want value and growth, go for stocks- if lower yield / security better off going for CD / fixed deposit type accounts which are still good by the way...

Mutual Funds in Nigeria is really not attractive. Not with some shares doing above 40-50% and ytd some have even double / tripled.

[hispy99]

If you want diversification, then a mutual fund is a good investment. Yes, it might not do well as individual stocks, but if it tracks the general market or does slightly better, then i think you are o.k. What is the guarantee that if you pick individual stocks you will select the winners (the stocks that have doubled or trippled) and not the Transcorp's?. You can never tell, even with all the research in this world, you may still end up buying duds.

I think a combination of both (mutual funds and buying individual stocks for your account) is ideal, especially for small time investors who cannot hold a diversified portfolio due to their small capital

[abbynelson28]

I agree with paragon...if you are keeping an eye on the market and doing research you can manage your funds with greater returns... the only constraint in this is initial investment money has to be big so that you can diversify your investments

Abby Nelson