Page 75 - Profile's Unit Trusts and Collective Investments 2021 issue 2

Costs and Pricing

which the CIS manager must fully inform any prospective investor about the nature of the
investment and the associated risks.
Section 100 (4) of CISCA states that “there must be included in every price list, advertisement,
brochure or similar document published by a manager or by any of its authorised agents in which
participatory interests are commended to the public, a statement in clear and unambiguous terms, to
the effect that the value of participatory interests in a portfolio is subject to fluctuation from time to
time relative to the market value of the assets comprised in the portfolio…”

Media Reports
In addition to the (at least) annual report from the portfolio manager, investors and advisors will
also find considerable information available in the media. Various internet services and LISPs make
available fact sheets (similar to the ones in this handbook), and prices and performance statistics are
available in many daily and weekly newspapers and financial magazines.
Tables of performance figures in the press usually follow the classification system used by the
industry (see Chapter 8).
The grouping of funds for comparative purposes is important because of the difficulties of
comparing the performance of different asset classes. Fixed-interest funds, for example, are subject
to very different factors than equity funds. Fixed-interest funds are therefore grouped together in
their own sectors, as are the various equity fund categories.
Another benefit of tables organised in categories is the ability to view a group of comparable
funds inrelationtoanindustrybenchmark,
such as the JSE All Share index for general Chart 3.7: Different Types of Performance Tables
equity funds.
ABC Up&Down Fund Over Last Three Years
Performance 60%
45%
Statistics
30%
Most investors consider good 15%
investment performance (a good rate of 0%
return) the sine qua non of investing in a CIS. -15%
This seems too obvious to mention, but in 0 4 8 12 16 20 24 28 32 36
fact the definition of “good performance” is
Trailing Twelve Month Returns
not entirely clear. 3yrs ago 2yrs ago 1yr ago Today
If “good performance” means, say, top
1yr to present (35.2%)
quartile performance, then over what
period? Or does it mean consistent 2yrs to present (29%, 13.6% p.a.)
performance over any range of time
3yrs to present (47.3%, 11.8% p.a.)
periods? Or does it mean tax efficient
performance (which is affected by the mix
Discrete Returns
of capital gain vs income in the total 3yrs ago 2yrs ago 1yr ago Today
return)? Or does it just mean a superior
performance to an appropriate This year (35.2%)
benchmark? And then there’s the Last year (-4.6%)
question of risk – surely good
performance must be achieved at an Yr before last (14.2%)
acceptable level of risk? What about
inflation – surely performance figures are Annual Rolling Returns (calculated half-yearly)
meaningless unless they take inflation 3yrs ago 2yrs ago 1yr ago Today
into account? 1yr to present (35.2%)
1yr to 6 months ago (-3.6%)
Measuring and comparing “investment
1yr to 1yr ago (-3.6%)
performance” is not as simple as it seems. In 1yr to 1.5yrs ago (31.9%)
addition to the question of which standard 1yr to 2yrs ago (14.2%)
you measure against, there are also a number

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Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts