Re: gph:(yields)

[ Q2 03 - Q4 05 Archive ] [ Current Message Board ] [ Archives ] [ Search ]

In Reply to: Re: gph:(yields) posted by Mark on November 09, 2003 at 20:56:06:

: : : : 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

:

Mark,

I think I have it figured out. Thank you very much for your good explanation.

Jim

Replies: