Can help understand

[apathetica]

Got this from syfe:

Return and risk

If you held this portfolio for the last 15 years then you would have seen an annualized return of 9.68%. For comparison, its benchmark Morningstar portfolio had an annualized return of 9.29%, or about 4% lower return.

Why is it 4% lower return?

 

[apathetica]

Oops i got it.
9.68-9.29
=0.39
0.39÷9.68
=0.040289256198

 

[Mecisteus]

Ok that is really a funny way of presenting.

 

[tesarise]

Ok that is really a funny way of presenting.

i think thats the standard way to present ba? either like this or basis points difference.

personally i think this way is a more accurate representation of the performance difference

 

[Mecisteus]

i think thats the standard way to present ba? either like this or basis points difference.

personally i think this way is a more accurate representation of the performance difference

I don't think it's a standard. I may be wrong though.

9.29% pa is 4% lower returns than 9.68% pa.

Don't you find it weird mathematically?

 

[tesarise]

I don't think it's a standard. I may be wrong though.

9.29% pa is 4% lower returns than 9.68% pa.

Don't you find it weird mathematically?

i see wrongly. yes you are correct, that is not the correct way to calc.

lets say 10k invested in both portfolios.
Portfolio A gives you 9.68% returns = 10968
Portfolio B gives you 9.29% returns = 10929

10968 is only 0.35% higher than 10929

 

[celtosaxon]

Any return % is always based on the principle, not the return itself. Comparing returns is always one return % minus the other return %. Let’s look at a simple example:

Investment #1 -

$1,000 principle
$100 gain (10%)
$1,100 ending balance

Investment #2 -

$1,000 principle
$110 gain (11%)
$1,110 ending balance

Did investment #2 make 10% more or 1% more? The answer is obvious.

I don't think it's a standard. I may be wrong though.

9.29% pa is 4% lower returns than 9.68% pa.

Don't you find it weird mathematically?