Its again this month of the year when all fund managers put all the awards on the table and show of to the investors. Congratulation to all the winners. Its a recognition for the hardword and achievement for the pass years.
How much does an awards means to investors? Do you understand what they mean? Step back and think what does a fund that gained 127% in 10 years means to you? For example is the Public Bond Fund. This is definately one of my favourite fund... to be included into the profile of conservative investors.
Before I proceed, lets see what does total return means to the investors. Lets take example of the highest return which we see in the above chart - Public Ittikal Fund. This fund has gained 313.34% return for the past 10 years. Meaning that if you would have invested RM100K on 31 December 1997, by 31 December 2007 your RM100K is now = RM100 X (1 + total return % ) = RM100 X (1 + 3.1334) = RM413.34K.
Annualised return means the return per annum. This especially important to compare to an alternative investment instrument which return are normallly quoted in annual basis, a good example of this is fixed deposit which offers 3.8% per annum. Now we wish to convert the total return of the funds to annualised return. A simple annual return is just = total return (%) divide by the total years of investment. But a compounding return is slightly different where we take into the compounding effect of the investment.
(1+simple annual return%)^total years=(1+total return%)
This table summarizes all the compounding annualised return for the awards funds. Example PB Growth Fund's compounding annualised return is 8.53% per annum (not 126.66% divide 10 years to be 12.66% per annum)
The critical question is, yah so what now? What does this mean? Thus after we calculate the compounded annualised return for all funds, we will wish to compare it with our base line benchmark. Which for most conservative investors are fixed deposit :)
The above two tables shows that the annualised return for all the award winning funds outperform the fixed deposit return.
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