About fund performance

Understanding performance can be tricky. Below are some of our most popular questions that may help answer your questions.

What is fund performance?

The performance of your fund is worked out by adding the value of your investment if you were to have reinvested all your distributions, to the amount of growth in the fund unit price.

Performance is usually shown as a percentage over a specific period of time. When performance is quoted, it usually doesn’t include contribution fees, withdrawal fees or tax payable.

What are the guidelines for calculating fund performance?

The calculation uses the withdrawal value of an investment at the beginning and the end of a stated period.
It’s assumed that your distributions are being reinvested
Entry fees are not included
Management fees are included (but any dollar changes made to your account are not included)
Any additional amounts invested are not included (except the reinvested distributions)
No allowance is made for tax

Why do published performance figures sometimes vary from my own return figures?

There are various reasons for this. Some of these are:

Fund performance is calculated by comparing the withdrawal value of an investment at the beginning and end of a standard period such as a quarter. As prices change daily, the performance of your investment will obviously be affected by the exact dates on which you invest and withdraw
Entry fees are not applied when calculating performance, as these fees can differ from investor to investor, and fund to fund
Where funds distribute income, it’s assumed the income will be reinvested. If you’re not reinvesting your distributions, you’ll have a different result
Quarterly returns published by some surveys are based on the unit prices at the last day of each quarter (e.g. June quarter returns use prices at 31 March and 30 June). Returns we quote are based on the unit prices at the first day of each quarter (e.g. June quarter returns use prices at 1 April and 1 July). This concept also applies to returns over other periods (e.g. monthly, yearly, etc)

Why is ‘chasing returns’ a mistake?

As markets are unpredictable, it’s unlikely that the same asset class or sector will perform the best for two years running – it’s only happened twice in the last 20 years.

Also, when you chase returns, it’s likely that you’re selling out of the worst-performing asset class for a low price and buying into the best-performing asset class at a high price. This is not a good move as it results in loss of capital.

The solution is to diversify across all asset classes. The more diversified your investments are, the more chance you have of picking a winner – reducing the risk of low returns.

Why doesn’t my investment move in line with world share-markets?

At BT, we aim to generate returns above and beyond the returns from indices (more than one index). We do this by investing in some shares that make up indices, but also investing in other shares that we believe have been under-priced by the market.

Published returns of global indices are reported in that country’s currency, not in Australian dollars. This means that when the Australian dollar is strong, foreign performance returns are diminished when converted to Australian dollars.