Now lets get down and dirty to the mathematics section: I will not explain all the terms here as I assume you can google them.

1) Look through your assets. Look at their past return, lets take 3 years, now, annualized their return. You may take 5 years or whatever years, but my data is 3 years only. So I'll stick with three years. Remember to take the annualized return and not the absolute return.

2) Now, do a standard deviation calculation of your assets return. Formula = [(Sum of [individual rtn - mean rtn]^2)/n]^1/2. If you want to use Semi-deviation instead of standard deviation, then count only the assets which have a rtn below the mean instead of all points. But the n remains the same.

3) Now you would have a return and her corresponding standard/semi deviation.

4) To calculate risk adjusted performance (aka Modigliani^2 ratio) = [(Rtn of your portfolio - Risk free rate)/Stan-Dev of portfolio] X Stan-Dev of benchmark + Risk Free Rate. NB: I used KLCI as my bench mark and One year FD in local bank as my risk free rate.

5) Value at Risk is given by the formula = Mean Portfolio Rtn + (zeta x Stan-Dev of portfolio) where zeta is taken as -1.64. The assumption is that zeta is -1.64 for a normal distribution curve at 95% confidence level.

Don't ask me more about this zeta value, I just take it as gospel truth from my lecturer, I am a pragmatic person, therefore I am not so concern for its theory and how zeta is derived.

WongMK, wrt you belanja me makan, not necessary, as long you think what I say is useful and is not bullocks and as long as other who are interested about personal investing find my post useful for them, that is reward in it self. Beside, I am not living in Klang Valley. Very far from it.

Xuzen

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Added on April 24, 2012, 7:04 pm

If you do not do any financial analysis of your fund, how could you confidently answer this. As usual, we can never predict how it will perform in the future.

That is why there are so many ratios and theory made by the financial gurus to measure and mitigate the risk but not the return.

Please note that in most of this theories/ratio, the risk is more important than rtn.

As one famous investor puts it (can't remember who): Take care of the risk, and the profits will take care of itself.

But as a start, buy The Edge weekend newspaper, look at the Normandy Fund Table and choose the fund that has high Sharpe Ratio... that can be a good start.

Happy investing, Malformed.

Xuzen

My rebuttals are as follows:

1) LTCM is a hedge fund. Hedge funds tend to be illiquid. Why Sharpe ratio failed in those scenarios are already explained in the links you provided, so I need not elaborate.

2) Sharpe ratio when used to evaluate plain vanilla unit trust is still ok, because the unit trusts' assets are equities and they are highly liquid. Furthermore, the funds move in tandem with their respective benchmark. Hedge funds usually have no benchmark to compare with.

3) Another point I want to highlight wrt Sharpe ratio is that it can only be used to compare within assets of similar class. For example, bond funds tend to have very high Sharpe ratios, do that mean we put all our money into a bond fund? No, because a Sharpe ratio is only meaningful when compared with assets of similar class.

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Added on April 24, 2012, 9:37 pm

Give me the name of the fund and let me run some numbers before I comment further.

Unfortunately, the Normandy Table is only available in the Print format (The weekend version, not the daily one).

Xuzen

no interest rate in UT. its call distribution(if any) frm the total returns.

u opt for monthly regular investment (DDI), where u get less unit for higher price and vise versa.
by this method u will accumulate units over the time without worry abt market trends. ur average cost per unit shud be cheaper than market price to make profits.

buy cheap sell high = profits

also, if u opt for re-invest the distribtuions(if any), u will accumulate more units (because u r buying more units using ur distribution amount without SC), and it will help u for cheaper average cost per unit.

the returns in UT depends on price (NAV)  movement, not the inretest/distribution.

go to how to calculate UT in my signature for better understanding waht i mean.

Sorry, this is probably a new fund. I don't have the proper data to calculate it.

The one which I have data, I can tell you that PBAREIF (PB Asia Real Estate Income Fund) is a winner.

For PBAREIF, its 3 year annualized rtn is 20.39% p.a where the 12.00% rtn is due to the effort of the Fund manager (Jessen-alpha rtn or excess rtn over the benchmark) and the Risk Adjusted Performance is 15.64 as compared to its benchmark of 7.43%. In another word, PBAREIF is a winner. 

A word of caution, do not put all your eggs into one fund. Spread it out across a few asset class. Example, money market, bond, Asia Equities, Real Estate etc.

Xuzen

An advice from your relative that UT got annual interest rate? 

Woho, a manager said to potential client, UT got annual interest rate? 

I think u confuse abt interest rate, dividends and distribution.

Interest rate – given for bank deposits.
Dividends – in EPF / stock/ Koperasi.
Distribution – in UT.

For ur info, initially in UT its call dividends too, lately  the term change to distribution. (Cherroy correct me if I wrong)
Normally UT agent use term dividends for better understanding even though dividends and distribution NOT the same.

That why I ask u to read my blog abt how to calculate the UT for better understanding.

But it is NO way in PM statement says abt dividends.

Please photoshop or any link that can show UT has written word of UT has "annual interest rate".

I think many did not hear this before, first encounter, very interested to know.  

u can get it from fund review.....  http://www.publicmutual.com.my/LinkClick.a...LY%3d&tabid=248

look at the PSF bottom annual returns for past 10 yrs. look at distribution(sen) for 2010. it's 9.0 sen, meaning RM0.09.

ok ok .. i got it now.

its call pocket calculator. its a table/formula for compounding interest where u can use this table/formula to calculate any vehicle which can give compounding returns like FD,EPF, UT and others.

u can take Annual interest rate from the table as annual/average compunded return in UT.

take note: its not abt distribution, its a abt total return in UT.

Hear ya go.
Added a check with my own units received, just in case - must lar, sharing right info/data mar.
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Hi Malformed.
Yeah, i do rely on Excel a lot as i know my weakness - simple logic can get confused when lots of numbers are thrown around, my processing power low mar, thus outsource to Excel lor 

Anyhow, i'm doing this at work (Excel to prove savings, VS comparisons, etc.) thus, it's second-nature to me to "break things down" in Excel to use simple logic on.

Asking of distributions, between bond fund and equity fund. Is the distribution same?

I mean the bond fund distribution will not affect your total investment value. Just the unit. In equity fund, is it the same as bond fund OR it's like share (ie: interest/return)- meaning, even if we CHOOSE not to reinvest the distribution, equity investment value stays the same (which is not in bond fund case).

I'm starting to be a little confused.

maybank n BSN.

I can say it is quite easy for me...

for existing acc, still need to chosse the tied agent. for new acc, u can choose none.

Yup, you're right.
But er.. just a thought ar... even if "no agent" is selected when U invest online via Public Bank or Public Mutual Online, U still bleed 5.5% for equity funds and 0.25% for bond funds.
Thus, why bother with having different "agents" / "no agents"?

In addition, pls keep in mind:
Equity A under Agent 001 CANNOT BE SWITCHED to Equity B or Bond B under Agent 002.
Thus far lar from my experience - i've like 2 accounts from different agents. The rest all under self heheh.

Just a thought 

Hhehe - why ar?

With self-service, my estimated cost of investing into equity funds is about:
a. Cash: 3.4375% (including income tax of 25%) - near the "normal rates" of most fund houses and distributor
b. EPF: 1.6875%  (including income tax of 25%) - beats the "normal rates" of most fund houses and distributor

+ can get access to those nice historic data for monkey-ing around with heheh.

Just a thought