Re: gph:(yields)
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Posted by Mark on November 09, 2003 at 20:56:06:
In Reply to: Re: gph:(yields) posted by Jim on November 09, 2003 at 13:24:55:
: : : I have an investment as follows: : : : Purchased 4/29/02, Sold 7/22/02, gain 29%, yield about 6% : : : Purchased 1/6/03, thru present, gain about 5% : : : The graph yield is "gph: 79.91", this does not seem to be correct?? : : : Any ideas?? : : : JIm : : Hi Jim, : : The "gph" figure is for the term equal to the graph's date range.
: : The yield is also "annualized". It also depends on what type of
: : yield you are using. See the "Yields" menu command. What type
: : of yield are you using, and what is the date range of your graph? : : Thanks,
: : Mark
: : --
: : Mark Beiley
: :
: : Fund Manager, portfolio management software for Windows 95/98/ME/NT/00/XP
: : : Thank you Mark, : I am using ROI yield and the date range on the graph is 4/29/02 thru 11/7/2003.
: When I switch to Fund Performance yield gph: is 7.57 which seems a more reasonable value.
: I understand yield is an annualized value. I don't fully understand your help explanations on the different yields. Perhaps you could explain in laymans terms the difference between ROI and fund performance yields using my investment as an example. : Jim Hi Jim, Sure, here goes... Example: Bought 100 shares @ $10 on 4/29/02
Sold 100 shares @ 12.9 on 7/22/02 If you plot the ROI yield from 4/29/02 to 7/22/02 the yield will
be about 200%. You had a gain of 29% in less than 3 months, so if
you annualize this, it will be the 200% value. (How did you get
the 6% figure above?) To calculate an annualized ROI Fund Manager extrapolates the
performance for the given time period to 1 year. Then, you bought some more shares on 1/6/03, and they've gone up only
5% in about 10 months. If you annualize this, it is roughly 6%. So, if you look over the whole time period you
had some amount that gained 200% and you had some amount that only gained
6% annualized. Depending on how much you had invested for each period it
will be weighted appropriately. Let's assume you had purchased another
100 shares at 12.9 on 1/6/03, this comes out to an annualized ROI yield of 37%
if you look at the term from 4/29/02 through 11/7/03. If instead you had
purchased 1,000 shares your ROI yield for the same time period would reduce to
only 9% because it weights the gains proportional to how much you had invested.
You gained 200% for 3 months with a lesser amount of money, as compared to
how much you had invested for 10 months at only the 6% rate. All of the above is "ROI" yield. It takes into account how much gains
you had in your invested money. The "Fund Performance" gains completely
ignore when/how you invested. They only look at the share price movement
of the underlying investment. You didn't give me prices for the above, so
I'll make some up for this example. Assume it was at $10 on 4/29/02 and
ended at $11 on 11/7/03. If you look at the Fund Performance yield
for the time period of 4/29/02 through 11/7/03 this is an annualized yield
of 6.4%. You gained 10%, but it was over a period of 1 year and 7 months, so
annualized this is the 6.4% number. For the Fund Performance yields, it
doesn't matter if you gained or lost money, it just looks at the change in
share price (and distributions). The bottom line is that ROI Yields show how well you personally did with
your money, and the Fund Performance yields show how well the intrinsic
investment did. If you timed the market well, your ROI will be higher
than the Fund Performance, and if you timed it poorly, it will be lower.
If you look at these 2 yields over a time period where you didn't add/remove
any money, the ROI and Fund Performance will be the same. Thanks,
Mark
--
Mark Beiley
Fund Manager, portfolio management software for Windows 95/98/ME/NT/00/XP
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