Author Topic: How is annual return calculated?  (Read 1319 times)

Zola.

• Bristles
• Posts: 404
• Location: UK
• Let's do this.
How is annual return calculated?
« on: April 10, 2018, 08:10:21 AM »
http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-80-equity-accumulation

Looking at this ^

Its the only fund I am in now, I put a set amount in every month. How is the total annual return calculated each year? Is this a collective average across all companies in the indexes?

If a fund returned 10% over a year, should your fund worth be worth 10% more, if the units have been held for over a year? I suppose with drip feeding each month this would off set the total value when things are being calculated.

Crazy how it varies, over the last 5 years its been:

6.14%
17.83%
-2.41%
24.41%
1.10%

Hoping this year will be better!

never give up

• Handlebar Stache
• Posts: 2113
• Location: UK
• Not spending like there is tomorrow
Re: How is annual return calculated?
« Reply #1 on: April 10, 2018, 10:11:37 AM »
hi Zola,

Yes this is quite complicated (well certainly more than my poor brain can cope with). Monthly investing creates a whole load of mathematics! The VG figures will just be based on the fund price change over the year. It's more complicated from your own investment perspective. Here are a couple of articles that may interest you. You may want to be sober and sat down before attempting to read them.

http://monevator.com/how-to-unitize-your-portfolio/

http://www.morningstar.co.uk/uk/news/68719/is-an-annualised-return-the-same-as-an-average.aspx

Just_Looking_Here

• Posts: 13
Re: How is annual return calculated?
« Reply #2 on: April 11, 2018, 03:07:36 PM »
Do you have this in an ISA or SIPP? If not, you might want to push the Acc version into a tax wrapper or use Inc instead... Much easier to work out dividends!

Zola.

• Bristles
• Posts: 404
• Location: UK
• Let's do this.
Re: How is annual return calculated?
« Reply #3 on: April 12, 2018, 02:46:48 AM »
Cheers guys

Yes I have this all in an ISA

I am still none the wiser, kinda! haha