Understanding Fund % Changes

Lokolo

Just looking at funds and wanting assistance:

http://www.iii.co.uk/factsheets/?type=detail&mex=FRCAPA

This fund has a +151.09% over 5 years. Now am I right in saying that this means it has an 'IR' of 8.6% yearly? (I did: 1.5109 ^ 1/5).

And second question is: looking at the fund graphs a lot of them (90%) are starting to 'decay' as such as start to drop, is this because of the FTSE and credit crunch? If so, I am assuming investing now wouldn't be a good idea until everythings all fine and dandy?

Aegis

Lokolo wrote: »

Just looking at funds and wanting assistance:

http://www.iii.co.uk/factsheets/?type=detail&mex=FRCAPA

This fund has a +151.09% over 5 years. Now am I right in saying that this means it has an 'IR' of 8.6% yearly? (I did: 1.5109 ^ 1/5).

That would be for 51.09% growth. You wanted to do 2.5109^(1/5) instead, resulting in 20.2% annualised growth.

And second question is: looking at the fund graphs a lot of them (90%) are starting to 'decay' as such as start to drop, is this because of the FTSE and credit crunch? If so, I am assuming investing now wouldn't be a good idea until everythings all fine and dandy?

The whole world seems to be seeing the effects of the credit crunch, but there are a few other factors that are causing some of the markets to move in other directions. However, the single largest factor is this credit crisis, though how long it will last is anyone's guess. If the world governments start to stimulate their respective economies with interest rate cuts, we will see a general recovery of equities but rising inflation levels.

As for when to invest... Timing the market is next to impossible. If you invest now, you'll be investing at a better time than 6 months ago but a worse time than a few years ago, at least as far as face value goes. Of course, there's no guarantee that prices will recover, but the likelihood is that they will at some point.

If you want to hedge your bets a little you can always use pound-cost averaging (or drip-feeding) to smooth out the volatility that we're seeing at the moment.

Lokolo

Aegis wrote: »

That would be for 51.09% growth. You wanted to do 2.5109^(1/5) instead, resulting in 20.2% annualised growth.

Oh... I originally thought that but I thought 20% for a 'low' risk fund was too good considering you get less than 10% on cash alone. Awesome, least I now know where to start, thanks

Aegis

Lokolo wrote: »

Oh... I originally thought that but I thought 20% for a 'low' risk fund was too good considering you get less than 10% on cash alone. Awesome, least I now know where to start, thanks

I'm not sure you can call a UK Special Situations fund "low risk"!

Just remember that past performance is no guarantee of future performance, and also that the last 5 years have for the most part been very good for all the major markets, with the possible exception of fixed interest investments.

The current situation will be where the high risk funds in the wrong sectors show just how volatile they can be!

Lokolo

Aegis wrote: »

I'm not sure you can call a UK Special Situations fund "low risk"!

Just remember that past performance is no guarantee of future performance, and also that the last 5 years have for the most part been very good for all the major markets, with the possible exception of fixed interest investments.

The current situation will be where the high risk funds in the wrong sectors show just how volatile they can be!

Oh.... well the FT rating this put them in the class risk as low, so thats what I was going by as I would think the FT are quite useful in terms of information..?

Yeh well I have filled up cash ISA this year and will fill up cash ISA next year so wasn't sure where to put money from there, and I know S&S's should be long term and want to get the money out for when I am around 25 (now 19) so was looking into funds.

Aegis

Hmm, I think I misread! It's select opps, not special situations. Quite a mix up on my part!

That certainly lowers the risk, but if it's low risk, it's still only low risk for a collective investment, not on an absolute scale.

Lokolo

Ok thanks for the info