How we calculate representative historical performance of a fund (unit trust)
Endowus aims to provide the historical performance of the best proxy to a fund prior to the inception of the fund so as to capture a sufficiently long period to illustrate the past market cycles such as the 2008 Global Financial Crisis. The challenge Endowus encounters is that one fund may have several share classes with different inception dates, different fees, and different denomination currencies and even for the earliest share class it may not date back to the period that we aim to provide.
Endowus provides the representative cumulative historical performance in a table, including the yearly returns since the earliest available performance data, YTD, 1M, 6M, 3Y, 6Y and 10Y returns, and in a chart, which shows growth of capital using monthly performance data. The annualized 1Y, 3Y, 5Y, 10Y return is also presented. The performance data is computed on single pricing basis.
Therefore, Endowus’ best effort to closely match performance results for longer historical periods, is via using the following hierarchy of monthly returns data, moving down the list only when the higher priority data does not exist:
- Subscription share-class (the exact fund you are buying)
- Oldest share-class of the same fund vehicle, adjusted for currency and fund-level fees
- Oldest share-class of a different fund vehicle with a similar underlying fund strategy, where appropriate, adjusted for currency and fees.
- Prospectus benchmark, adjusted for currency and fund-level fees. Prospectus benchmark is the benchmark that the fund manager assigns to the fund and is usually aligned with the investment strategy of the fund.
- Alternative benchmark, adjusted for currency and fund-level fees. If the prospectus benchmark assigned by the fund manager is deemed unsuitable, we will assign an alternative benchmark that is broadly aligned with the investment strategy of the fund if possible. The alternative benchmark may be a single index or a blend of indices.
- Asset class benchmark, adjusted for currency and fund-level fees. If an alternative benchmark is required but cannot be identified, we will use an asset class benchmark that best illustrates the unit trust’s asset class exposure. The asset class benchmark may be a single index or a blend of indices.
In certain cases, Endowus’ Investment Office may choose to include multiple sources of monthly returns data according to the hierarchy set out above to illustrate the theoretical representative historical performance of the fund. Again, we reiterate that whilst we make every effort to provide clients with full transparency and use accurate and timely information, representative historical performance has its limitations and should not be relied upon on its own for financial decision making. Any investment views and investment products/services should be reviewed against a person’s investment experience, objectives, financial resources and personal circumstances. Further, although the data is taken from sources deemed reliable, we make no guarantee as to its accuracy, completeness or reliability.
How we calculate representative historical performance of a portfolio of funds
Representative historical performance of a portfolio of funds is calculated in the following steps:
- Combines the fund returns in their appropriate weight from their earliest common start date
- Runs the returns of the portfolio and includes threshold-breach based rebalancing if and when the portfolio would have materially drifted from the specified target asset allocation.
Read more about rebalancing
While we believe this methodology results in a performance data that is most similar to the portfolio prior to its existence, it is not, and cannot be, completely precise.
Fees treatment
Portfolio performance includes fund-level fees and does not include Endowus Fee, which range from 0.05% to 0.60% per annum depending on investment objective, source of investment (CPF, SRS or Cash) and client assets under advice (“AUA”).
Data source
Endowus licenses the use of data from Intermediaries, including, in part, from Morningstar, a third-party provider of stock market data. Endowus makes no guarantee, representation or warranty and accepts no responsibility for the accuracy and/or completeness of the information. Where data is cited from Morningstar, the following disclosures apply: ©2021 The information, data, analyses and opinions (“Information”) contained herein: (1) include the proprietary information of Morningstar and its content providers; (2) may not be copied or redistributed except as specifically authorised; (3) do not constitute investment advice; (4) are provided solely for informational purposes; (5) are not warranted to be complete, accurate or timely; and (6) may be drawn from fund data published on various dates. Morningstar is not responsible for any trading decisions, damages or other losses related to the Information or its use. Please verify all of the Information before using it and don’t make any investment decision except upon the advice of a professional financial adviser. Past performance is no guarantee of future results. The value and income derived from investments may go down as well as up.
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