Just curious how a set sum of money - say $100,000, would have done in some "low or moderate risk" funds over last 15 years. Target funds dated 1998 would offer some insight I suppose. Am thinking of cautious funds, with perhaps 60-40 or 40-60 allocation models. Not necessarily the best. Just something Joe or Jane Doe might have latched onto & how handily they might have beaten bank CD returns or similar over a 15 year span.
Two problems here. (1) Most fund returns are given in "average annual" terms. This is considerably higher than with true annual compounding. And, the farther back you go, the more distorted the numbers become. (2) Sites I'm familiar with generally go back only 10 years. Appreciate any insights.
Comments
Regardless, one way of finding this (give or take the errors of Yahoo) is to look at finance.yahoo.com. Look at the historical prices, adjusted close. (The adjusted close is supposed to take into account reinvested dividends.) For example, for Magellan (FMAGX), the current (3/25/13) adj close is 79.03. Fifteen years (3/25/98) ago it was 53.88.
So the total compounded return was (73.03 - 53.88)/53.88 = 46.677...%
Annualized yield = [(1 + compound return) ^ 1/(number of years)] - 1
= [(1.466778...) ^ 1/15] - 1 = [1.02586...] - 1 = 2.59%
Another way to get the 15 year yield is with M*. Using their premium screener, you can screen on a ticker (e.g. FMAGX). Then, when you view results, you select "Create/Modify custom view", and add "15 year return" to the list of columns you want displayed in your custom view. M* reports a 15 year annualized return of 2.55% for FMAGX. (Could be that I'm off by a day with the Yahoo data - M* may have started on March 26.)
Also ... found an interesting illustration. Using "average annual" returns of 5% and 8% (2 scenarios) over a 4-year span, they manage to come up with vastly different end results (depending on market volatility). http://americancenturyblog.com/2013/02/cio-insights-volatility-and-returns/
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And, for what interest it may hold for others, located a couple such funds, but with 1996 inception dates. (1) American Century's Strategic Allocation Conservative (TWSCX), currently holding 45% equities. has returned an average +6.09% since inception. (2) Its sister fund, Strategic Allocation Moderate (TWSMX), also with a '96 inception date, has returned +7.05%. It's currently about 64% in equities. https://www.americancentury.com/funds/monthly_performance.jsp
Interestingly, Lipper places both of the above funds in the same category of "mixed allocation - moderate" - than proceeds to give the second fund top marks for performance, but down-grades the first (more conservative one) by a couple notches in their scoring system.
In an attempt to get a handle on short term money market rates over the same period, I located two funds with 1996 inception dates:
The Wells Fargo (previously Strong) Advantage Ultra Short Municipal Bond Fund (SMUAX) has returned an average 3.05% since its 1996 inception. http://www.wellsfargoadvantagefunds.com/wfweb/wf/funds/profiles/profile.jsp?fundNo=3230
The Wilmington Short Term Corporate Bond Fund (Institutional with 10 Mil minimum) has returned an average 3.93% since 1996 inception. https://research.zecco.com/research/mutualfund/snapshot.asp?mcsymbol=MVSTX
Neither of these is typical of what the average Joe and Jane Doe investor would own. However, together they might reflect an average short-term Interest rate climate somewhere in the 3-4% range over the 17 years since 1996 - for those willing to take only minimal risk. The two American Century moderate risk funds did considerably better - even taking into account the devastating equity and junk bond markets of late 2007 into early 2009. FWIW
Here is a linear, step-by-step procedure to complete the calculation that I believe you seek. It starts immediately.
For the 15 year data that you seek, go to Yahoo finance at:
http://finance.yahoo.com/
Next, input the fund symbol in the upper left side, get quote box and hit.
In the column on the left side of the screen will be a “performance” option in the listing. Hit it.
The resulting screen will display both annual and quarterly returns for extended timeframes. Copy the values (15 or 60) you wish. Statistically, the 60 point quarterly data is more meaningful from a volatility perspective.
Transfer the copied returns data to a Standard Deviation (SD) calculator.
A Standard deviation calculator is at:
http://ncalculators.com/statistics/mean-standard-deviation-calculator.htm
Input the quarterly or annual returns in the box at the right side of the screen and hit calculate button. The SD will appear instantly. The mean is the average annual return.
The heavy lifting is now complete.
The final simple calculation is to convert average return and standard deviation into compound (geometric) annual return.
The equation is:
Compound Return = average annual return = 0.5 X SD X SD
All values should be in decimal equivalents.
The calculation is now finished.
The compound return is always less than the average return unless SD is zero.
The compound return is the true return that is needed when estimating or evaluating end wealth.
I hope this is helpful, satisfies your needs, and is not overly simplistic.
Best Wishes.
Here's a "simple" way to get the average (annualized) return for a MMF over the past 15 years - and this technique will work for any mutual fund.
1) Get its latest prospectus via the SEC web site. Look for the 10 year annualized performance figure.
2) Get the corresponding prospectus from 10 years ago. Look for the 5 year annualized performance figure.
3) 15 year annualized performance =
{ [(1 + ten year figure) ^ 10] x [(1 + five year figure) ^ 5] } ^ (1/15) - 1
For example, I looked up Fidelity Cash Reserves.
Jan 2013 Prospectus (with 10 year performance through Dec 31, 2012): 1.81%
Jan 2003 Prospectus (with 5 year performance through Dec 31, 2002): 4.42%
15 year annualized =
{ [(1 + 0.0181) ^ 10] x [(1 + 0.0442) ^ 5] } ^ 1/15 - 1 =
{1.4853295... } ^ 1/15 - 1 =
1.02672669... - 1 =
2.673% / year
For example, for 15 years here are the annualized (geometric) total return for some funds:
VWELX 6.93%
VWINX 7.06%
VBINX 5.50%
VGSTX 6.18%
FBALX 6.97%
GLRBX 7.09%
OAKBX 9.01%
PRPFX 8.42%
MAPOX 7.17%
Thanks! For some reason, I'd forgotten that M* added the 15 year performance to its "visible" data, which is why I've coaxed it out of the premium screener for a long time. (Doesn't work for MMFs, since M* doesn't track them, but is the simplest method for pretty much everything else.)
Price's short term bond (PRWBX) produced 4.23% over 15 years.
The (Strong) Wells Fargo ultra short muni (SMUAX) fell all the way from 3.05% to 2.69% after lobbing off the two years. Wow. Only 2.69% average annual return over 15 years for those investors. Even with the Federal tax exemption, not too hot.
NOTE to first-time users at M* ... Make sure you enter fund ticker symbol in the "Quote" box at the top. If you enter in the "Search" box, the performance tab won't come up.
Regards,
Ted
Top Growth Funds 15 Years: http://www.marketwatch.com/tools/mutual-fund/screener?FundType=1&FundValue=0&ReturnFundPeriod=11
Top Value Funds 15 Years: http://www.marketwatch.com/tools/mutual-fund/screener?FundType=2&FundValue=0&ReturnFundPeriod=11
Top Core Funds 15 Years: http://www.marketwatch.com/tools/mutual-fund/screener?FundType=3&FundValue=0&ReturnFundPeriod=11
Top Mixed Funds 15 Years: http://www.marketwatch.com/tools/mutual-fund/screener?FundType=4&FundValue=0&ReturnFundPeriod=11
Top Global Funds 15 Years: http://www.marketwatch.com/tools/mutual-fund/screener?FundType=5&FundValue=0&ReturnFundPeriod=11
Top Sector Funds 15 Years: http://www.marketwatch.com/tools/mutual-fund/screener?FundType=6&FundValue=0&ReturnFundPeriod=11
Top S&P 500 Funds 15 Years: http://www.marketwatch.com/tools/mutual-fund/screener?FundType=7&FundValue=0&ReturnFundPeriod=11
Top Fixed-Income Funds 15 Years: http://www.marketwatch.com/tools/mutual-fund/screener?FundType=8&FundValue=0&ReturnFundPeriod=11
Top Government Debt Funds 15 Years: http://www.marketwatch.com/tools/mutual-fund/screener?FundType=9&FundValue=0&ReturnFundPeriod=11
Top Funds 15 Years: http://www.marketwatch.com/tools/mutual-fund/screener?FundType=0&FundValue=0&ReturnFundPeriod=11
In any case, here's a BusinessWeek column from 2001 backing up my "enhanced cash" characterization: "'[Federated Muni Ultra Short Fund is] just one step away from money market funds - a step most people miss' .... Others of this ilk include Strong Muni Advantage Fund yielding 4.21%, and Nations Short-Term Municipal A, with a 4.45% yield."
My point is that between the high grade portfolio and the ultra short duration, the object of the fund was preservation, not yield. Enhanced cash - just a step up from MMFs. That its return wasn't great compared with its short term muni peers was expected and desirable - trading return for safety.