HL performance graph confusion

fronty

Hi all,

Just getting myself a little confused here.

In my HL ISA, I have some income funds that are showing a loss, eg UBS Global Enhanced Equity Income is nearly 18% down.

If I look at the fund page on the HL web site, the annual return over the previous 5 years is mostly positive.

If I click on the graph, this also shows a positive total return of about 25% over the previous 5 years. So I'm getting confused why the portfolio says it's down 18%. Then I noticed on the graph you can change the "chart type" from "total return" to "price" - now the graph pretty much inverts and I see a downward trend in price of approx. 18% - which matches what the portfolio says.

What I don't understand is what does "total return" actually mean? The price has gone down but the total return has gone up? Does "total return" assume that all income is re-invested? It's an income fund so that's not the case here, the income is withdrawn.

It feels a little misleading to measure the total return if it does assume that the income is reinvested. It doesn't say anywhere if this is the assumption.

Or I am misunderstanding what is going on here?

I'd upload some screenshots but there doesn't seem to be an easy way to do that here.

george4064

Your understanding is correct, total return shows the price plus all dividends re-invested.

Personally, I think the graph should by default show the total return because it shows everything that the fund is 'returning' to investors.

P.S. This is not just a graph design by HL, all websites typically show total return (and price return if available).

Malthusian

fronty wrote: »

Does "total return" assume that all income is re-invested? It's an income fund so that's not the case here, the income is withdrawn.

You have answered your own question.

It feels a little misleading to measure the total return if it does assume that the income is reinvested.

It isn't misleading, it is what total return means - the total of price growth + income yield. It would be misleading to compare the return from two investments, one of which paid 5% into the investor's bank account and one which reinvested the 5% within the fund, and say that the second fund did better than the first because it's 5% higher, ignoring the 5% the first paid into the investor's bank account.

Performance graphs universally show total return unless you tell them not to. The HL statement simply compares the amount paid in with the current value.

As the name of the fund implies, it is designed to pay out a high level of income into your bank account at the expense of growth in the price.

SonOf

It feels a little misleading to measure the total return if it does assume that the income is reinvested. It doesn't say anywhere if this is the assumption.

A number of data providers will allow you to select total return or unit price only in the tools.

However, total return is not misleading as the distributions are part of the return.