Performance of managed funds

If you hold units in a managed fund you may receive income in the form of a distribution, as well as an increase or decrease in the unit price of the fund.

For example, if you invest $100,000 into a managed fund and the unit price was $2.50, you would have 40,000 units ($100,000 divided by $2.50).

Let’s assume the managed fund pays out a distribution (income) of 7.5 cents per unit. At the end of the year the unit price increased to $2.60.

The total return is calculated as follows:

Distribution received (40,000 x 0.075)         $ 3,000

Add capital growth ((2.60-2.50) x 40,000)     $4,000

                                        Total return     $7,000

The total return is $7,000 on your original $100,000. The return for the managed fund is 7% (0.07) for that year.