Why is the performance of an individual investment different from the return published by the fund manager
The individual investment performance shown within Performance by Asset currently uses the ‘My Returns’ or Extended Internal Rate of Return (XIRR) calculation methodology. This means it takes into account the size and timing of your contributions, withdrawals and other transactions into that fund, and reflects your personal ‘real-world’ performance experience as an investor.
By comparison, the return published by a fund manager is typically based on the ‘Investment Returns’ or Time Weighted Returns (TWR) calculation methodology, which excludes the impact of investor deposits, withdrawals and transactions, and solely measures how the fund itself performed due to market movements and the decisions of the investment manager.
As a result, the return shown for an individual investment within your account may differ from the return shown in a fund factsheet, even though both figures relate to the same underlying fund.
For example, imagine a fund returned +20% during the first half of the year and -10% during the second half, resulting in an overall fund return of +8% for the year.
If you invested in the fund at the start of the year and remained invested throughout the period, both your ‘My Returns’ and the fund’s ‘Investment Returns’ would be 8%.
However, if you invested most of your money after the strong first-half performance had already occurred, your personal return would be lower than the fund’s return because a larger proportion of your money missed the strongest period of growth.
In short, the return published by the fund manager shows how the fund performed, while the return shown in Performance by Asset shows how your money performed within that fund. These figures can therefore differ depending on when and how much you invested.
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