Most investment fund managers use quantitative analysis to some extent in assessing which funds or instruments to commit their assets to. Indeed, there are managers who only use quantitative criteria in their decision-making processes. Part of that analytical process will involve looking at historical performance, and gauging it by a series of revelatory ratios and measurements.
A selection of key quantitative ratios is now offered by FE Trustnet, as an extension to the suite of professional resources available to its readership. It is axiomatic that investment decisions cannot hinge solely on the amount of return that a fund generates. Investors will also want to consider other factors: what degree of risk was assumed in order to make that return? By how much has the fund outperformed a notional risk-free investment? Has the manager demonstrated skill in adding extra returns, or merely tracked the fund's benchmark?
Answers to these and other important questions can be found in the performance measurements we are now making available. To render these more approachable and useful, in each case we have provided an explanation of what the measurement is, and what it is supposed to signify. For the less familiar concepts, we have also given worked examples so that readers can see how a particular ratio might be used in practical terms. In all, we believe that this will foster a deeper understanding of how funds have really performed and, ultimately, help readers towards better-informed investment