technique

Comparing performance results for a large number of funds over a large number of months is difficult using traditional line or bar graphs as the display becomes jumbled. Graphic Investor avoids this problem by using a contour chart to compare performance.

application

Contour performance charts are used for three types of data. In each case the measure of performance is the percentage profit (or loss) per month.

Sector Average Performance: The average performance of all funds in each sector is calculated and these 'sector-averages' are compared on one chart.

Fund Performance by Sector: There is a separate chart for each sector. All funds in the same sector, active for the time range of the chart, are compared. The performance of the AVERAGE fund is also shown.

Differences from the Average: There is a separate chart for each sector. The 'difference' is found by subtracting the AVERAGE monthly performance of the sector from the monthly performance of each fund.

example

The main features of a performance chart are shown below.

contours

A key to the contour levels is given at the top of the chart. In the example, a contour line of '-6' means a loss of 6% in a month. The contour lines have been drawn at 2% intervals. At any point on the chart the colour between two contour lines indicates the performance range at that point. To find the performance of any fund in any month look at the position where the grid lines for the fund and the month cross. The colour at that point and its position relative to the contour lines indicates the performance of the fund.

totals

The 'Total%' column at the right of the chart shows the result of adding up the monthly profit or loss percentages over the time range of the chart. The funds are listed in decreasing 'Total%' order. Note that the 'Total%' figure is not the same as the actual return obtained from holding the fund over the time range. The actual return is compounded and has a higher value than the figure shown. However the order of funds in the list is the same for both methods.

detail

The 'Total%' of the AVERAGE fund in a 'Fund Performance by Sector' chart may differ slightly from that of its sector in the 'Sector Average Performance' chart. The former is an average of just those funds in the chart. The latter uses all funds in the sector, including those that have not been active for the whole time range of the chart. The difference indicates whether or not newer funds are improving the sector-average performance compared to older funds.

how to use

To get the most out of performance charts start by looking at the Sector Average Performance chart. This compares monthly profit or loss results across all sectors. From the Sector Average Performance chart you will see that some sectors generally move in and out of profit at the same time. In fact the sector list has been sequenced to emphasise this similarity, or 'correlation'. For further details of correlations and relationships between sectors follow the 'Correlation Table' and 'Linear Relationships' links from the side menu.

Once you have chosen a sector to analyse click on that sector in the 'Fund Performance by Sector' drop-down menu. You can then see how each fund has performed over time.

For an alternative view click on the 'Differences from the Average' link at the bottom of the performance chart. This shows when each fund performed above or below the sector AVERAGE.