FAIR Canada

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@PhronesisAsignaturas 9 күн бұрын

How do you know the percent increase or decrease you had prior to comparing it with a benchmark? ^_^ Please enlighten me. This is for a homework

@chewkeat Жыл бұрын

Thank you!

@RadhikaMeera 2 жыл бұрын

this a good example however the title is misleading . This example shows different rates of return for different cash flow cycles.

@mohamedelhammady1924 2 жыл бұрын

for this example, if I assume that the investor put 50k for first year and then 50k for the second year, I will still get that TWR is zero even if the investor money lost 10k .. he put 100 k and at the end he has only 90k .. how can TWR decribe profitablity if my money value decreased but still got a zero at TWR ?

@deathmetalmaniac1 2 жыл бұрын

Thank you this was very helpful

@xnotmarcox 2 жыл бұрын

Useful for my exam this week. Thank you!

@muskduh 2 жыл бұрын

thanks

@pbrown4 3 жыл бұрын

Why would you care about these rates? Why wouldn't you just say I've invested 100,000 and I've got back 90,000 so I've lost 10% of investment?

@smacktonian 3 жыл бұрын

Figures lie and liars figures.

@wildreams 3 жыл бұрын

Why the dislike? It’s very concise and well presented.

@sahilbhatotia2622 3 жыл бұрын

your explanation made by concept crystal clear thanks a lot

@Funkmaster445 3 жыл бұрын

this doesn't help

@jirensama1622 3 жыл бұрын

Am i the only one who finds it relatively difficult to understand these two return measures compared to other measures of returns?

@ElChe-Ko 3 жыл бұрын

Thank you very much for this video! one of the bests on the topic!!

@ulugbekkodirov1788 3 жыл бұрын

Hi, thanks for the video! Where can I get benchmarks(or market indices) for other indexes for example for SPDR S&P 500 ETF; Vanguard Russell 2000 ETF; iSHares S&P Mid-Cap 400 Growth ETF and so on?

@chandermohangoyal9711 4 жыл бұрын

How did u get -6.83 returns

@PhiTonics 4 жыл бұрын

Eh? Who else is still confused? 🤔 Wish public schools had at least ONE class for this kind of stuff..

@LeoFan18 4 жыл бұрын

All the dislikes from non-finance people 😂

@aldur101 3 жыл бұрын

Except this is meant to educate non-finance people. How the person got -6.83% for the money weighted return is totally non-intuitive and until I read the comments I had no idea there was a complex formula involved. The guy should have gone through the calculation.

@simfinso858 4 жыл бұрын

Time Return use Rate or RRI function & for money weight Return IRR

@yousefalsuwailem9590 4 жыл бұрын

Crystal clear !

@IDPYouTube 4 жыл бұрын

Thanks for the straightforward explanation. Does the “value of the fund” used at the end if each period include only the value of shares or shares plus any unallocated cash in the fund?

@rahulnair2250 5 жыл бұрын

Hi, How did you get -6.83% ? Can you please explain whats the extact formula for MWRR

@yuanzhilee6405 4 жыл бұрын

The formula is -50 + -50(1+i)^-1 + 90(1+i)^-2 . You can use trial and error to find two values of i which causes a sign change in the output of the function and solve for a approximate value of i using linear interpolation or you can use quadratic formula.

@soumadeepsaha7194 5 жыл бұрын

useful...

@happywanderer2874 6 жыл бұрын

What is the benefit for the client? This looks like all the benefit is for the financial advisor while he’s getting his money upfront and he’s taken you hostage for 7 years regardless of how badly the mutual funds perform. No?

@davidwebb2318 6 жыл бұрын

Just a stupid example because the two calculations used different investments so are not comparable at all.

@RajVaswaniRox 4 жыл бұрын

They're comparable. Do it in excel it'll be on the same lines. He was just trying to make the point that Time weighted rate of return is not affected by timing of cash inflows or outflows whereas money weighted rate of return (IRR) is sensitive to cash inflows or outflows. Get your facts straight before posting shit, appreciate the fact that he did his research and made this video, whereas you saw it once and commented just because you're stupid and lazy to not research or look it up.

@FB-tr2kf 6 жыл бұрын

-6.82178% not -6.83 CFO = -50K CF1 = -50K CF2 = 90K CPT IRR

@yuanzhilee6405 4 жыл бұрын

F LB Can also use quadratic equation solver on Casio fx570 calculator

@yangmagic0703 6 жыл бұрын

Good video. Almost exactly the same as what I explain to clients, excep that this failed to address the 10% free withdrawal/switch option. Clients are able to take out or keep 10% of their investment in front end funds (no fee upon withdrawal) in each calendar year.

@skube 7 жыл бұрын

How are these the exact same investment? One example is $100k invested for two years, while the other is $50k invested for two years + $50k invested for one year.

@josephk87171 7 жыл бұрын

The way the time weighted rate of return works is that in investment 2, you would still get 0%. The reason is that the formula cancels out the timing of your cash flows this video doesn't go over how the formula is calculated which is = 1+ (Ending balance of period - starting balance of period / ending balance of period) * (Ending balance of period - starting balance of period / ending balance of period) - 1 = time weighted rate of return. Money weighted return calculation for investment 1 would return the same 0%, since you are starting with 100,000. So, Both money weighted and time weighted return = 0% in investment 1. But time weighted returns 0%, while money weighted return negative 6.83% in investment 2. You see if you are trying to see how good a money manager is using time weighted returns make sense, since you don't control when people put in and take out money. But money weighted matters to the investors since in investment 2 they are down to $90,000 but their investment statement would say it's 0%.

@kunalchaudhary3020 7 жыл бұрын

Joseph K my answer is 6.11 can you help with the calculations??

@Walleggwp 7 жыл бұрын

Thanks!

@jns1930 8 жыл бұрын

Great video! Can you please explain what calculation you used to get 0% for the Time Weighted percentage? In addition, can you also please explain what calculation you used to get -6.83% for the Money Weighted percentage? I am not to clear on these answers.

@skube 7 жыл бұрын

For the first (time-weighted) example, I believe you can calculate the total return with the following formula: (1+0.25)*(1-0.20)-1 = 0 The second (money-weighted) example, is a more complex formula where you solve for r based on a series of guesses. Fortunately, it's much easier with a spreadsheet where one can use the =XIRR() function, while making use of dates, beginning values, cashflows and ending values.

@jns1930 7 жыл бұрын

Thanks for responding to my question.

@mickwong6325 7 жыл бұрын

skube so the -6.83 return was from trial and error and not calculated from the calculations you've made in the example? There has to be a way you were able to calculate -6.83 with the example you showed us

@MichaelSmith-fo6qq 8 жыл бұрын

This 'charity' has to be a favor-for-friends type deal. 8 years and you just now start a youtube account?

@BCCLLQP 8 жыл бұрын

These are nice videos, and potentially useful. I think you are doing some of what you often accuse the investment industry of doing here, in that you are only telling one side of the story. 1. You indicate that the mutual fund marketing material uses the time-weighted return. It has to. This is not a choice made by the mutual fund dealers. It's the law. It is required by NI 81-102. You make it sound like fund companies are making an attempt to deceive in their marketing material. 2. You have chosen an example in which the time-weighted return illustrated is superior to the dollar-weighted return illustrated. Why not select an example in which the opposite is true? Both are equally likely. 3. The video starts off by indicating that the differences are 'significant.' I'm not sure what that word means, but, in reality, for most investors in most circumstances, the difference will be negligible, and the explanation will be confusing. You have chosen a very specific fact pattern here to amplify the differences. Had you chosen a more typical example (monthly PAC over two years, for example, and performance in the single digits up and down) you would have nearly wiped out the difference in comparison between the two.

@ATGAT 7 жыл бұрын

Additionally, this could go the other way. If the first year was down 20% and the second year was up 25% the money weighted return would appear more attractive than the time weighted. Aside from obvious bias, great video.

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