How do we calculate returns?
When we discuss the returns of our Funds one of the questions that invariably arises is; how do we arrive at the total return figure? The frequency of the question suggests that it’s a mystery to many of our investors, so this short paper is designed to help you understand the figures we report.
This White Paper provides investors with an explanation of how total return figures are calculated for The Montgomery Fund and The Montgomery [Private] Fund. As at 30 November 2014, the Total Return of The Montgomery Fund since inception was 50.31 per cent and the unit price was $1.3730. The question we are seeking to answer is how the total return (after expenses) can be 50.31 per cent if the unit price, which commenced its life at $1.00 is, at the same time, $1.3730.
Importantly, it is worth knowing the investment returns are not generated by Montgomery Investment Management. Fundhost Limited is the Independent Administrator, Responsible Entity and Trustee of both Funds and Fundhost is responsible for all of the calculations.
To learn more about our funds, please click here, or contact me, David Buckland, on 02 8046 5000 or at dbuckland@montinvest.com
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Tony C
:
Hi David
Well done.
Rodger often talks about diversification in a portfolio of stocks so that 1 bad result does not hurt a portfolio return to much
How many managed funds should a investor hold in say a 1 million dollar super fund to achieve that same diversification?
Roger Montgomery
:
Hi Tony,
David will come back to you on that one. The answer of course depends on the overlap of the managers’ holdings. For example, if the two managers held exactly the same portfolio there’d be no benefit in having two managers.
Yavuz Atasoy
:
It is simple stuff to me. I check unit prices regularly from fundhost web site and do my own calcs, which is the same as what MPF (or fundhost) calculates, knowing the distributions.
Don McLennan
:
Hi David
Can you advise what happens to the franking credits in the Montgomery Fund
Do they remain in the fund or are unit holders able to use them
Thanks Don