okay, simple maths should be adequately clarified, otherwise IRR could be taken as dubious maths doing manipulative accounting.

1. The returns are 9120 - 4200 = 4920. This RM4920 is the ROI (returns on investment).

2. This ROI can also be expressed in percentage. 4920/4200 x 100% = 117%.

3. If the payment is in one lump sum at the end of 12 months, then this percentage of 117% is also the effective rate, meaning it is based on annual basis. The effective rate is to have an apple-to-apple comparision.

4. If the payment is in 2 payments, RM4560 in June and another RM4560 in Dec, then the effective rate, using the Excel XIRR function to quickly calculate it, is 196%.

5. This shows that getting 2 payments is better than getting one lump sum payment, 196% vs 117%.

6. If the payment is every month, then the IRR increases further to 416%. Showing that it is giving a much higher effective returns, 416% vs 117%.

Of course, if we sit down and think which one is better - one payment at the end of 12 months or getting payments every month, we could also come to the right answer using common sense.

The simple maths, using IRR to show the effective returns, shows the answer in more precise numbers to show how lucrative the returns are.

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PS. There is no easy formula to calculate the IRR. The quick and easy way is using Excel function XIRR.

Within this XIRR function, it has a recursive looping algorithm making a 'guess' each time it goes through the loop until it gets closer and closer to the answer.

The 3rd number in the function helps to start the guesswork... otherwise the function could fail to give any answer if it was looping too many times...

This post has been edited by j.passing.by: Aug 1 2016, 03:56 PM

I think you are mixing up CAGR and IRR... and yklooi who monitors his portfolio daily (and getting a feel of real numbers in action) knows it better.

That 4 funds with their percentages are either the CAGR on a lump sum purchase or the IRR on a group of purchases on the same fund.

On the other hand, IRR is on the whole portfolio, or on a group of different funds, or on a group of many transactions on a single fund.

A 70% CAGR on a single transaction, depending on its time-value (and also its volume) - which is most likely less than a month held due to its high figure - will have little influence in boosting up the portfolio IRR.

Think about this... to get the expected performance, you need to get lucky - not once, but twice. Lucky to get it before it goes up, and lucky again to get out at the right time at the peak.

But in trying to achieve the expected returns... the expectation is already limiting the "luck" and not letting it run to its peak since we would have taken profit when it hit the desired returns.

That is if we are lucky to be holding the right fund... and luck could also runs out before the fund reached the desired expectation returns and plummet again before we can take profit.

When you plan to get into any particular fund and give it a 3 months run....

... you've gotta ask yourself one question: "Do I feel lucky?" Well, do ya, punk?

Whether it is true or not or a typo or mistake, it do not really matters... real experience based on real numbers gained from monitoring a real portfolio do matters... your own portfolio matters, trying to replicate what others achieved - ""Do I feel lucky?" Well, do ya, punk?"

Had just google to see what is United U-Li, whether it is small-cap, fledgling or penny stock... got this page on institutional shareholders... RHB 10.08%, Eastspring 4.27%.... share dropped on 18/8 -9.09%.

http://markets.ft.com/data/equities/tearsh...e?s=ULICORP:KLS

The report is as at 30/Mar... it may not be the usual daily holdings as funds are known to do window dressing for the quarterly reports...

EPF is the largest fund and is holding only 3.02%, hence the percentage within its own fund is a very small minute percentage maybe 0.001%.

The question is: We may diversified with more than one fund, but is the fund itself is diversified enough?