Calculate a Fund

Question

I did an investment. I am worried I misunderstood everything. I am not worried about the money I was looking to do something risky, but looks like I might have to learn the hard way about doing more research first.

I invested £500 into this:

https://am.jpmorgan.com/gb/en/asset-management/gim/adv/products/d/jpm-uk-equity-core-fund-e-net-income-gb00b58l4h43

£1,000 into this:

https://am.jpmorgan.com/gb/en/asset-management/gim/awm/products/d/jpm-asia-fund-a-net-accumulation-gb0030879695

My question is, using previous data how do I calculate my returns?

• UK in 2015/2016 it said 15.18%, so £500 + 15.18% = £575.90. Since this is income would I receive £75.90 since it is the net profit?

• Asia in 2015/2016 it said 41.76%, so would this mean £1,000 + 41.76% = £1,417.60 for that year? But this is accumulation so it is reinvested, meaning next year it will be £1,417.60 then increase/decrease another %?

I was told those high % are actually to do with the Fund's performance as a whole, not the returns I would receive. If that is true how can I calculate my returns?

I feel a bit stupid for believing I could get such high returns, I got very confused I guess... Thank you to anyone that can clarify my mess.

Edit: I am in UK and using an ISA so it is all tax free. The % above are after tax and other costs associated with the Fund.

Answer 1

A mutual fund's return or yield has nothing to do with what you receive from the mutual fund. The annual percentage return is simply the percentage increase (or decrease!) of the value of one share of the mutual fund from January 1 till December 31. The cash value of any distributions (dividend income, short-term capital gains, long-term capital gains) might be reported separately or might be included in the annual return.

What you receive from the mutual fund is the distributions which you have the option of taking in cash (and spending on whatever you like, or investing elsewhere) or of re-investing into the fund without ever actually touching the money. Regardless of whether you take a distribution as cash or re-invest it in the mutual fund, that amount is taxable income in most jurisdictions. In the US, long-term capital gains are taxed at different (lower) rates than ordinary income, and I believe that long-term capital gains from mutual funds are not taxed at all in India. You are not taxed on the increase in the value of your investment caused by an increase in the share price over the year nor do you get deduct the "loss" if the share price declined over the year. It is only when you sell the mutual fund shares (back to the mutual fund company) that you have to pay taxes on the capital gains (if you sold for a higher price) or deduct the capital loss (if you sold for a lower price) than the purchase price of the shares. Be aware that different shares in the sale might have different purchase prices because they were bought at different times, and thus have different gains and losses.

So, how do you calculate your personal return from the mutual fund investment? If you have a money management program or a spreadsheet program, it can calculate your return for you. If you have online access to your mutual fund account on its website, it will most likely have a tool called something like "Personal rate of return" and this will provide you with the same calculations without your having to type in all the data by hand. Finally, If you want to do it personally by hand, I am sure that someone will soon post an answer writing out the gory details.

Answer 2

My question is, using previous data how do I calculate my returns?

"Stupid" is the person who does not ask. Better to have visited first, but even asking after the fact will get you an education, at a very low cost.

You would only see those returns had you invested at the beginning of the period advertised. "Past results are not a guarantee of future returns."

Since we have no idea where you are in life, there's little advice I can give you except to invite you to learn. You can easily spend 100 hours on this Stack reading advice on the beginning investor, and every stage after that. We all needed to start somewhere, and in your case, just showing up was a great first step.