Citywire Website

dave1983_2

Hi all, I've started my investment ISA and I've been having a look on the internet at various sites and a colleague pointed out Citywire.co.uk, which looks full of information.

Just a quick question though, what do the various parts to the Risk column mean: Maximum Drawdown, Standard Deviation and Sharpe ratio? Also, what is the Lipper Leaders scorecard a measure of? Sorry if this is obvious but I'm not too certain what they mean in terms of more or less risky.

Finally, in my portfolio I've got Invesco Perpetual High Income Fund, Invesco Perpetual Corporate Bond (both lump sum of £250), Jupiter India Fund and JPM Natural Resources (both monthly £25). For a bit of balance I was considering adding the Invesco Perpetual Distribution Fund or M&G Corporate Bond or Startegic Corporate Bond - what do people think?

nottingham13

Normally you cannot invest £250, usually its at least £500 per fund and £50 monthly?

Who were you going to invest with? ie. bestinvest, hargreaves lansdown, fidelity?

fg22

dave1983 wrote: »

Just a quick question though, what do the various parts to the Risk column mean: Maximum Drawdown, Standard Deviation and Sharpe ratio? Also, what is the Lipper Leaders scorecard a measure of? Sorry if this is obvious but I'm not too certain what they mean in terms of more or less risky.

These are all statistics calculated on past performance data and as always this is not necessarily a good guide to the future. I don't feel any of the risk measures truely reflect peoples attitude to risk. Furthermore, when applied to some non-equity funds (such as absolute return funds) they can be pretty misleading. Despite all this they do have their use in helping to assess the risk when choosing a fund.

Maximum drawdown is the largest loss that you would have suffered if you had invested in the fund at its peak and withdrawn at its lowest point. Therefore a smaller negative number is better.

Standard deviation is the standard deviation of the returns of the fund giving a measure of how variable the returns are. A smaller number is better.

The Sharpe Ratio is the return divided by the standard deviation of the return. It therefore gives a measure of the return achieved per unit of risk taken. A higher number is better ie the number will be higher if either the return was higher or the risk (measured by the standard devation) was lower.

These statistics can all be calculated on different time periods and may give different results if this is done. I guess citywire may use a period of 3 or 5 years (or from inception if the fund is newer)


The Lipper ratings are on a scale of 1-5 with 5 being the best. The funds in each category are ranked and the 20% of the best funds get a 5.

Total Return is simply a measure of the total return (capital and income)
Consistent Return is a measure of risk-adjusted return
Preservation is a measure of how well the fund avoided drops in value.
Expense is a measure of how high the funds charges are (although this may not be accurate if they are partially rebated ie with H-L)

dave1983_2

Thanks to both of you for your replies! Nottingham, the IFA I'm using has some leeway with Fidelity to allow smaller investments so that's how I'm investing £250 lump sums and £25 per month - though once I'm more familiar with the system i will probably increase both of these. Usually, you are right, the have minimums of £500 and £50 and I am using Fidelity as they are the only ones who will allow the smaller investments.

FG22, thanks for clarifying things in layman's terms, I'd done some digging myself and just got a load of financial jargon. With the Lipper ratings though, would a 5 for expense be the most expensive or the cheapest?

Thanks again! :T

fg22

5 would be the cheapest
(but I'm not quite sure how they calculate these things)

mr_fishbulb

dave1983 wrote: »

Finally, in my portfolio I've got Invesco Perpetual High Income Fund, Invesco Perpetual Corporate Bond (both lump sum of £250), Jupiter India Fund and JPM Natural Resources (both monthly £25). For a bit of balance I was considering adding the Invesco Perpetual Distribution Fund or M&G Corporate Bond or Startegic Corporate Bond - what do people think?

Invesco Perpetual Distribution looks like the same as their High Income Fund but with a load of bonds too. Their top 10 holdings are the same so it's not really increasing your diversification:

http://www.h-l.co.uk/funds/security_details/sedol/3394722
http://www.h-l.co.uk/funds/security_details/sedol/3303148

You seem to like income funds, rather than capital growth. Any reason for that?

Also the India fund is very specific. Any reason why you liked that instead of a fund covering all BRIC countries (Brazil, Russia, India, China) or an Emerging Markets one?

dave1983_2

Hi, I'd done some further research and seen the same regards the top ten holdings of the Distribution and High Income funds so I'm erring towards one of the M&G offerings for greater diversity but I'm also considering funds which specialise in Gilts for stability and security, something like the Fidelity MoneyBuilder Income or similar.

According to my Key Facts document the only income fund I'm invested into is the Invesco Perpetual Corporate Bond fund, with the remaining three being growth funds, which (I'm assuming) makes them accumulation?

My advisor said about the India fund specifically so that's why I went with it and I'm planning to add a generic emerging nations fund in the fullness of time.