Calculating Performance

General Performance Information Disclosure

The contents and data made available on performance charts, any stated index values, and other information is intended for illustrative and informational purposes only and is not intended to represent actual results that could be considered a recommendation of an investment or investment strategy a user could rely on to make an investment decision. The performance data and charts represent hypothetical results that are based on information over a defined period of time.

The charts themselves attempt to follow a standardised and consistent methodology for performance reporting, which we describe below. While we believe the performance data is gathered from reliable sources, the information that generates charts and performance results, uses historical data that has not been audited and validated, and may contain errors in pricing or other conditions. Further, Macrovue relies on third-party content providers for market data and information as the basis for the calculations it generates. However, Macrovue cannot be held responsible for the accuracy and timeliness of the content provided. You are responsible to validate the information used to aid you in your research of investments and the decisions you make.

You understand that any investment decisions you make are based on your own individual needs and tolerance for risk and that the content that you gather from any performance data or charts are just one of many factors you should consider before making your investment decision. The presentation of index performance for a Vue should not be regarded as an offer or a solicitation for the purchase of any Vue, and you are responsible for all investment decisions you make. Past performance is not an indication of future results and the index performance for any Vue is subject to fluctuation depending on shifting market conditions.

Calculating Performance

Vues are portfolios of stocks but are represented for purposes of performance as models, and as such, no actual money is invested in the underlying components of these models, no commissions or fees or other charges are reflected in the calculated performance and no actual trades have been executed in the marketplace that could be expected to represent actual results.

In calculating performance, we first assign each Vue a hypothetical initial value of $1 million at its origin date. We then allocate $100,000 to each stock in the portfolio. Note that based on the price of the stock on origin date (date of creation of the portfolio), the simulated investment may be greater than or less than $100,000. So for example, say stock XYZ was trading at $98. We would buy 1020 shares ($100,000/$98). The simulated investment would be 1020*$98 = $99,960 in stock XYZ.

When a portfolio is rebalanced i.e. one or more stocks in the portfolio are replaced, we invest the proceeds from the sale into the new stocks. We attempt to allocate the capital equally among the new entrants in the portfolio. They may not be equal due to numerous causes including minimum lot sizes at various exchanges and inability to invest in fractional shares. So from the previous example, if stock XYZ is now trading at $100, we would receive 1020*$100=$102,000. If another stock is chosen for the portfoliocalled ABC, then we would invest $102,000 in the new stock. Now, let’s say ABC is trading at $107. Thus, we would buy 953 shares of ABC ($102,000/107) and $29 would remain as cash.

If a dividend is received then it is added to the cash holdings in the portfolio and not reinvested. Performance on any given date is based on the growth of the initial $1 million to the current sum of stock and total cash holdings.

Macrovue calculates percentage returns using a dollar-weighted (also referred to as a ‘money-weighted’) return methodology. A dollar-weighted return measures investment performance taking account of the size and timing of cash flows.

The other widely used approach in performance measurement is the Time Weighted Return. In this method the effect of cash inflows and outflows is removed from the calculation. This is commonly used when evaluating fund manager performance. Investors, in contrast can control the timing of when they put money in or out of the portfolio. For this reason it is widely agreed that a dollar-weighted return is the most appropriate means of measuring performance from a private investor’s point of view.

Information about Vue Returns

Portfolio or Vue returns are based on stock prices from the end of the normal trading day and include any distribution and cash dividends. The stocks that make up a Vue may change from time to time – certain stocks may be removed and replaced with new stocks added to a Vue. These returns track those changes. However, commissions and fees that are incurred for actual transactions are not deducted from these hypothetical returns.

Actual customer returns will likely vary from the Vue returns shown due conditions such as corporate actions, transaction fees and customisation. The calculation of split-adjusted total returns involves the adjustment of historical prices for corporate actions such as cash dividends, splits, spin-offs etc.

In addition, actual transactions would include the expense of commissions and customers may change the stocks in their Vue on their own. Customers may choose not to change their Vue when the stocks in a Vue are changed in the Vue’s periodic rebalancing. There could be other corporate action events that may not be replicated in a Vue until the rebalancing period.