Understanding performance

Performance is your total return, made up of both income and capital growth. In a performance table returns or losses are expressed as a percentage of the amount invested. Remember these returns or losses may not include fees, charges or tax. The figures are annualised – or averaged – over the time frame stated on the table. For example, this fund returned an average of 8.16% per year over the past ten years.

Income primarily comes from dividends (shares), distributions (managed funds), rent (property), or interest payments (fixed interest and cash). You can expect different levels of income from different asset classes. Australian shares have traditionally had higher levels of income than other asset classes. Sometimes there may be a trade-off between higher income produced and the level of capital growth.

Capital growth occurs when the value of an investment goes up. You can capture this growth by selling at a higher price than you paid when you bought the investment. Different asset classes can expect varying amounts of growth. For example, bonds or cash are a steady conservative investment while international shares are highly volatile. Generally, a higher potential for growth means a higher potential for loss.

Total return is the sum of income from the fund and capital growth. A positive number means the investment made a profit; a negative number means the investment made a loss. Remember that you won't realise the capital growth component of your investment until you sell, and that past performance is not a reliable indicator of future performance.