Glossary
Annualized Return
Annualized Return is a measure of an investment's compounded annual growth rate over a given period. It represents the constant annual rate of return that would yield the same cumulative return over that period.
The annualized return calculation accounts for the effects of compounding. This provides a standardized rate that allows for an apples-to-apples comparison of investments with different holding periods.
On this platform, the annualized return is calculated assuming all dividends are reinvested on the ex-dividend date by purchasing additional units at the prevailing market price.
Example 1 - Fund A (No Dividend Distribution)
Assumptions:
- Fund A does not distribute dividends.
-
The unit prices of Fund A are:
- 31 May 2022: $100.00
- 31 May 2023: $102.00
- 31 May 2024: $110.00
- The initial investment is 10.00 units on 31 May 2022.
Calculation:
On 31 May 2022, the market value of the investment is $1,000.00 (10.00 units × $100.00 per unit).
On 31 May 2024, the market value of the investment is $1,100.00 (10.00 units × $110.00 per unit).
The cumulative two-year return is calculated as:
Cumulative Return = [(End Value / Start Value) - 1] × 100%
= [($1,100.00 / $1,000.00) - 1] × 100%
= 10.00%
The annualized two-year return is calculated as:
Annualized Return = (1 + Cumulative Return)^(1/Number of Years) - 1
= (1 + 10.00%)^(1/2) - 1
= 4.88%
Example 2 - Fund B (With Dividend Distribution)
Assumptions:
- Fund B distributes an annual dividend of $2.00 per unit.
- The ex-dividend dates are 31 May 2022, 31 May 2023, and 31 May 2024.
-
The unit prices of Fund B are:
- 31 May 2022: $100.00
- 31 May 2023: $102.00
- 31 May 2024: $110.00
- The initial investment is 10.00 units on 31 May 2022, before dividend reinvestment.
Calculation:
On 31 May 2022, the dividend of $2.00 per unit is reinvested, resulting in an additional 0.20 units [10.00 units x (2/$100)]. The market value of the investment is $1,020.00 (10.20 units × $100.00 per unit).
On 31 May 2023, the dividend of $2.00 per unit is reinvested, resulting in an additional 0.20 units [10.20 units x (2/$102)]. The market value of the investment is $1,060.80 (10.40 units × $102.00 per unit).
On 31 May 2024, the dividend of $2.00 per unit is reinvested, resulting in an additional 0.18909 units [10.40 units x (2/$110)]. The market value of the investment is $1,164.80 (10.58909 units × $110.00 per unit).
The cumulative two-year return is calculated as:
Cumulative Return = [(End Value / Start Value) - 1] × 100%
= [($1,164.80 / $1,000.00) - 1] × 100%
= 16.48%
The annualized two-year return is calculated as:
Annualized Return = (1 + Cumulative Return)^(1/Number of Years) - 1
= (1 + 16.48%)^(1/2) - 1
= 7.93%
Calendar Year Return
Calendar Year Return is a metric used to evaluate the annual investment performance of an asset over a calendar year period. It represents the percentage change in the market value of the investment, including any reinvested dividends, between the start and end of the calendar year.
On this platform, the calendar year return calculation assumes that all dividends are automatically reinvested on the ex-dividend date. This means that the dividends are used to purchase additional units of the fund at the prevailing market price on the ex-dividend date.
Example 1 - Fund A (No Dividend Distribution)
Assumptions:
- Fund A does not distribute dividends.
-
The unit prices of Fund A are:
- 31 Dec 2022: $100.00
- 31 Dec 2023: $105.00
- The initial investment is 10.00 units on 31 Dec 2022.
Calculation:
On 31 Dec 2022, the market value of the investment is $1,000.00 (10.00 units × $100.00 per unit).
On 31 Dec 2023, the market value of the investment is $1,050.00 (10.00 units × $105.00 per unit).
The calendar year return for 2023 is calculated as:
Calendar Year Return = [(End Value of Current Calendar Year / End Value of Previous Calendar Year) - 1] × 100%
= [($1,050.00 / $1,000.00) - 1] × 100%
= 5.00%
Example 2 - Fund B (With Dividend Distribution)
Assumptions:
- Fund B distributes an annual dividend of $2.00 per unit.
- The ex-dividend date is 31 May 2023.
-
The unit prices of Fund B are:
- 31 Dec 2022: $100.00
- 31 May 2023: $102.00
- 31 Dec 2023: $105.00
- The initial investment is 10.00 units on 31 Dec 2023.
Calculation:
On 31 Dec 2022, the market value of the investment is $1,000.00 (10.00 units × $100.00 per unit).
On 31 May 2023, the dividend of $2.00 per unit is reinvested, resulting in an additional 0.2 units [10.20 units x (2/$102)].
On 31 Dec 2023, the market value of the investment is $1,071.00 (10.20 units × $105.00 per unit).
The calendar year return for 2023 is calculated as:
Calendar Year Return = [(End Value of Current Calendar Year / End Value of Previous Calendar Year) - 1] × 100%
= [($1,071.00 / $1,000.00) - 1] × 100%
= 7.10%
Constituent Fund (CF)
A Constituent Fund is an investment fund that forms part of a Mandatory Provident Fund (MPF) scheme. Constituent Funds are required to comply with the regulatory requirements set forth by the Mandatory Provident Fund Schemes Authority (MPFA). These funds serve as the building blocks of an MPF scheme, allowing scheme members to allocate their contributions across different investment options.
Cumulative Return
Cumulative Return is a measure of an investment's total return over a specified period. It is calculated as the percentage change in the market value of an asset from the beginning to the end of the given time period, taking into account any dividends that were reinvested during that period.
On this platform, the cumulative return calculation assumes that all dividends are reinvested on the ex-dividend date. This means that the dividends are used to purchase additional units of the fund at the prevailing market price on the ex-dividend date.
Example 1 - Fund A (No Dividend Distribution)
Assumptions:
- Fund A does not distribute dividends
-
The unit prices of Fund A are:
- 31 May 2022: $100.00
- 31 May 2023: $102.00
- 31 May 2024: $110.00
- The initial investment is 10.00 units on 31 May 2022.
Calculation:
On 31 May 2022, the market value of the investment is $1,000.00 (10.00 units × $100.00 per unit).
On 31 May 2024, the market value of the investment is $1,100.00 (10.00 units × $110.00 per unit).
The cumulative two-year return is calculated as:
Cumulative Return = [(End Value / Start Value) - 1] × 100%
= [($1,100.00 / $1,000.00) - 1] × 100%
= 10.00%
Example 2 - Fund B (With Dividend Distribution)
Assumptions:
- Fund B distributes an annual dividend of $2.00 per unit.
- The ex-dividend dates are 31 May 2022, 31 May 2023, and 31 May 2024.
-
The unit prices of Fund B are:
- 31 May 2022: $100.00
- 31 May 2023: $102.00
- 31 May 2024: $110.00
- The initial investment is 10.00 units on 31 May 2022, before dividend reinvestment.
Calculation:
On 31 May 2022, the dividend of $2.00 per unit is reinvested, resulting in an additional 0.20 units [10.00 units x (2/$100)]. The market value of the investment is $1,020.00 (10.20 units × $100.00 per unit).
On 31 May 2023, the dividend of $2.00 per unit is reinvested, resulting in an additional 0.20 units [10.20 units x (2/$102)]. The market value of the investment is $1,060.80 (10.40 units × $102.00 per unit).
On 31 May 2024, the dividend of $2.00 per unit is reinvested, resulting in an additional 0.18909 units [10.40 units x (2/$110)]. The market value of the investment is $1,164.80 (10.58909 units × $110.00 per unit).
The cumulative two-year return is calculated as:
Cumulative Return = [(End Value / Start Value) - 1] × 100%
= [($1,164.80 / $1,000.00) - 1] × 100%
= 16.48%
Dollar Cost Averaging Annualized Return
Dollar Cost Averaging Annualized Return is a performance metric that calculates the compound annual growth rate of an investment, taking into account the effects of making periodic, fixed-amount contributions over the investment period.
Dollar Cost Averaging Annualized Return is similar to the traditional Annualized Return metric, but it accounts for the impact of dollar cost averaging – the practice of investing a fixed amount at regular intervals.
Dollar Cost Averaging Cumulative Return
Dollar Cost Averaging Cumulative Return is a metric that measures the aggregate return on an investment over a specified period, taking into account the effects of making periodic, fixed-amount contributions during that time frame. It is calculated by compounding the periodic returns, including the returns on the initial investment as well as any subsequent contributions.
The Dollar Cost Averaging Cumulative Return is similar to the traditional Cumulative Return metric, but it accounts for the impact of dollar cost averaging – the practice of investing a fixed amount at regular intervals.
Employer Sponsored Scheme
Employer Sponsored Scheme is a type of MPF scheme specifically designed for employees of a particular employer and its associated companies or subsidiaries. These schemes are exclusive to the employees of the sponsoring employer and are not available to the general public.
Fund Expense Ratio (FER)
The Fund Expense Ratio (FER) is a metric that provides insight into the operational costs associated with a MPF Fund. This ratio represents the expenses incurred by the fund as a percentage of its overall net asset value. While investors do not directly pay these expenses, they can have a significant impact on the investment returns generated by the fund.
The FER is calculated for each financial period of a Constituent Fund, based on the data from the previous financial period. It is important to note that the published FER may not reflect any changes in fees, charges, or expenses that have occurred during the current financial period.
Fund Risk Indicator
The Fund Risk Indicator is a measure that reflects the risk level of a MPF fund. It represents the fluctuation in the fund's value over a specified period, typically three years. The indicator is calculated as the annualized standard deviation of the fund's monthly rates of return over the specified period.
A higher Fund Risk Indicator value indicates greater volatility in the fund's performance, implying a higher level of risk associated with investing in that particular fund. Conversely, a lower value suggests lower volatility and a relatively more stable performance.
It is important to note that the Fund Risk Indicator is a quantitative measure based on historical data and should be considered in conjunction with other relevant factors, such as investment objectives, time horizon, and risk tolerance, when making investment decisions.
Fund Size
The Fund Size of a Constituent Fund is the total value of asset net of any liabilities of the Constituent Fund.
Fund Type
There are five different types of MPF funds available. The key features of each fund type are outlined below:
| Fund Type | Key Features | Fund Category |
|---|---|---|
| Mixed Assets Fund | These funds invest a majority of their assets in a combination of bonds and equities. They are further categorized based on their normal range of equity exposure, such as Mixed Assets Funds with a higher equity weighting or a lower equity weighting. |
The fund categories under this fund type are:
|
| Bond Fund | These funds invest primarily in bonds. They are further classified according to their investment objectives and policies, as stated in their respective statements of investment objectives and policies. |
The fund categories under this fund type are:
|
| Equity Fund | These funds invest a majority of their assets in equities. They are further categorized based on their geographic focus, such as global equity funds, regional equity funds, or country-specific equity funds. |
The fund categories under this fund type are:
|
| Guaranteed Fund |
These funds provide a guaranteed return of capital to investors, according to the specific features of the guarantee outlined in the fund's documentation. |
N/A |
| Money Market Fund |
These funds invest the majority of their assets in money market instruments such as short-term deposits and debt securities. They are further classified into "MPF Conservative Funds" and "Other than MPF Conservative Funds".
|
The fund categories under this fund type are:
|
Launch Date
The date on which a Constituent Fund is initially made available for investment by scheme members.
Management Fee
Fees charged by MPF schemes to cover the costs associated with managing and administering the funds. These fees are typically paid to the trustee, custodian, administrator, investment manager, and sponsor of the scheme for their services. The management fee is generally deducted from the assets of the Constituent Fund (CF) and is expressed as a percentage of the fund's net asset value.
Morningstar Rating
The Morningstar Rating for funds, commonly known as the "Star Rating", is a quantitative assessment of a fund's past risk-adjusted performance relative to similar funds. The rating system ranges from one to five stars, with the best performers receiving five stars.
The Star Rating accounts for both a fund's returns and the risk taken to achieve those returns. Funds that have delivered superior risk-adjusted returns compared to their peers receive higher ratings. Conversely, funds with subpar risk-adjusted returns relative to peers receive lower ratings.
While the Morningstar Rating can be a useful starting point for fund research, it should not be the sole basis for investment decisions. The rating is based solely on a fund's past performance, which is not a guarantee of future results. Additionally, a minimum three-year track record is required for a fund to receive a Star Rating.
For a comprehensive explanation of the Morningstar Rating methodology, please refer to the Morningstar Rating for Funds page on Morningstar's website.
Pricing Frequency
The frequency at which the net asset value of a constituent fund is calculated.