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The Importance of Return
 Return
is the growth in value of the fund over a given period. This is
the major concern of investors who want to know how much an historic
investment in a fund would be worth today.
The Total Return Graph
The Total Return graph compares the value of a lump sum investment
in the fund with the average value of all funds in the sector. Ideally,
we look for a fund with a Total Return graph in which the fund's
line is above the sector average's line, with the gap between the
two becoming wider and wider to the right as time progresses. With
any fund you would not want to see the fund's total return falling
below the sector average for more than a few quarters.
In their advertising campaigns, some investment managers have exploited
the fact that a change to the start date or scale of a graph can
produce much more positive looking graphs. All of ours use the same
start date, 1 January 1987, which marks the birth of PEPs. The period
since then incorporates the crash of 1987 and gives a fund which
had a poor start ample time to recover. If the fund was not in existence
at the time, then the line representing the value of the fund on
the graph starts at the beginning of the fund's first full quarter
and the value of the fund at the start is set to be equal to the
value of the sector average on the same date.
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