New to investing- interpreting data

bluebell321

Can you help with the basics please?

I am starting from zero knowledge and just reading websites to get a feel to begin with. People have suggested on another thread that I look at passive which I will do but one recent read on FoF made me realise that perhaps I can't interpret data given.

Here's one little journey:
I read this page:Top 5 global multi manager funds
and homed in on the HL special situations trust and data
The article mentioned a 34% 5 year total return. Now, I realise the figures were to 31 May 13 and the charts to November 13 but I guessed that the figures shouldn't be vastly different.
So,
1. The line graph ends at 109% on 30 Nov 13. What does this 0% to 109% range mean? That a £100 investment on 30 Nov 08 is now worth £209?
2.Have fees already been deducted and allowed for in the figure?
3. Why is 109% ( 5 years) so different from the 34% ( 5 years) in the article?
4. The bar graph appears to show annual returns. Correct?
5. If so, why shouldn't adding the five annual amounts equal the 5 year percentage of 109%? Compounding?

Gromitt

Where did you get your 109% from?

All I see is that the investment has made a decent income in the last 2 years and if I had invested between Nov 11 and Nov 12, I'd be quite happy about now.

But the chart only shows past performance, not future performance. You need to carefully check what the fund is investing in and whether or not you think those things will increase or decrease in value over the next few years.

bluebell321

Gromitt wrote: »

Where did you get your 109% from?

From the line graph here:http://citywire.co.uk/fund/hl-multi-manager-special-situations-trust/c10258?section=money#chartsandtables

it starts at zero at the origin then reaches 109% ( hover mouse at the end point of the line graph.)
I just don't see how the data interconnects with each other.

bluebell321

Gromitt wrote: »

Where did you get your 109% from?

You need to carefully check what the fund is investing in and whether or not you think those things will increase or decrease in value over the next few years.

This is where I was considering the option of paying for the skill of others to think through those aspects while I learn from scratch ( no exaggeration). But if I don't understand the data provided and how fees ( look expensive) fit in, I have a problem.

Cash ISA already filled. Wanting to deposit S&S allowance before year end but can see this is going to take quite a while to get to grips with everything.

bluebell321

I have just taken this fund as an example to try to understand how data should be read.

bluebell321

I think I have answered my question 5. I need to allow for compounding. You don't just add up annual returns to get the five year.

If I multiply each of the annual figures I get 2.0919 i.e. 109% increase. Small progress!
Please help with my other questions.

ozzage

Hi bluebell


1. I'm not sure what you're seeing, but when I look at the line graph from your link it shows me a figure of 32.69% on the far right for the HL fund. Seems plausible if it was up 34% in May. I definitely don't see 109%.

BTW the hovering doesn't work for me on IE11, only on Chrome, so it seems to be browser dependent in case somebody can't tell what we're talking about.

2. Yes those figures (both graph and article) are after fees.



3. You're hallucinating


4. The bar graph component is a mess. It appears to be attempting to show the discrete annual returns, but is failing from what I can tell. The graph doesn't match the figures in the table below and when you hover over it looks like it's only showing a 6 month period. I would ignore that as I think something is wrong with it. Somebody else may be able to explain what's going on.


5. Well see above but yes compounding will stop that working anyway. Three annual increases of 10% is not the same as a 30% increase over three years.


Starting point: 100
End of Year 1: 110 (100 + 10%)
End of Year 2: 121 (110 + 10%)
End of Year 3: 133.1 (121 + 10%)


So total increase over 3 years is 33.1%, if there is a 10% annual return.


Hope that's helpful!

bluebell321

ozzage wrote: »

Hi bluebell




3. You're hallucinating

Hello and thanks for helping.
I don't think I was hallucinating. I changed the graph from a three year to a five year as that was what the article was referring to and so that's where I got 109%.
Good to hear that's after fees.

But again, why the difference between 109% and 34%, unless the article meant three years rather than five?

If correct then, that would retrospectively mean that £100 deposited five years ago would now be £209 after fees. Wow! ( yes I know that future could well be different) but it shows that I should have considered S&S ages ago.

PippiShortsock

I think you'll find the answer to the 34% / 109% difference if you take a look at the 10-year graph for that fund. Between May 2008 and November 2008 the fund fell in value by at least 50%, so it had much further to climb from the latter date to get to today's valuation.

I've found looking at 5-year performance is a very movable feast given how particularly volatile the markets were in 2008. If you plot random buy/sell points on that 10-year graph you can measure anything from a potential 125% growth to a 63% loss during that period.

jimjames

bluebell321 wrote: »

I think I have answered my question 5. I need to allow for compounding. You don't just add up annual returns to get the five year.

If I multiply each of the annual figures I get 2.0919 i.e. 109% increase. Small progress!
Please help with my other questions.

That definitely answers your question. I've just had a look at that fund and it is up 109% in 5 years. That is probably one of the best 5 year periods to pick although March next year will show some of the best performance figures recorded across the board in recent history as March 2009 was the low point of the last crash. So you do need to have some context as to the periods used.

Your other questions

1. The line graph ends at 109% on 30 Nov 13. What does this 0% to 109% range mean? That a £100 investment on 30 Nov 08 is now worth £209?

Yes that is what it means. 0% is your original investment and the percentage growth over that time. Over 100% means it has doubled.

2.Have fees already been deducted and allowed for in the figure?

Yes, the performance figures take account of charges

3. Why is 109% ( 5 years) so different from the 34% ( 5 years) in the article?

The article is dated May 2013 so the 5 year performance then would be May 2008 to May 2013, current performance is Nov 2008 to Nov 2013. The biggest part of the market crash took place in 2008 so early 2008 fund values would be before the crash and late 2008 would take account of them. If your fund unit price was £1 in May 2008, fell to 50p in Nov (a fall of 50%) then you would need a rise of 100% to get back to your starting point.

4. The bar graph appears to show annual returns. Correct?

Yes

5. If so, why shouldn't adding the five annual amounts equal the 5 year percentage of 109%? Compounding?

Yes. You've seen that in your calcs now.

ozzage

bluebell321 wrote: »

Hello and thanks for helping.
I don't think I was hallucinating. I changed the graph from a three year to a five year as that was what the article was referring to and so that's where I got 109%.
Good to hear that's after fees.

But again, why the difference between 109% and 34%, unless the article meant three years rather than five?

If correct then, that would retrospectively mean that £100 deposited five years ago would now be £209 after fees. Wow! ( yes I know that future could well be different) but it shows that I should have considered S&S ages ago.

Apologies yes I just looked at 3 years. I strongly suspect that the article writers did the same...! A bit worrying...


If you look at the current 5 year return on the HL site for that fund it's running at 103.4% with 27.59% in the last three years. That is much closer to the figures you're looking at.


If you also take a look at Jupiter Merlin Growth, the figures don't match there either.


You are right about starting 5 years and what an amazing return you'd have had, but........... remember that a massive crash had just occurred and the market was just starting an amazing rebound. Absolutely NOT typical conditions!