The Factsheet Tricks, 2 of 10
The big cumulative number
A large total return sounds better than a modest yearly one with a big fall on the way.
What it is
Over enough years, small yearly gains add up to an impressive-looking total. A cumulative figure on its own hides how long it took and how bumpy the ride was.
Why it works
- EU guidelines ask for yearly figures alongside any cumulative one.E22
Example Growth FundFactsheet, page 1
Illustration, not a real fund
+37.02% total return
Over 10 years that is 3.20% a year, with a fall of -27.32% on the way and a worst calendar year of -12.27%.
Synthetic sample fund. All figures computed by the openfactsheet library.
How to spot it
- Divide by time: ask what the return was per year.
- Ask for the biggest fall from a peak, and how long it lasted.
What OpenFactsheet does
Shows the average yearly growth, every calendar year and the biggest drop side by side with the total.
Sources
- E22 U.S. SEC (2020). Press release 2020-334, Investment Adviser Marketing Rule. U.S. SEC (2021). Investment Adviser Marketing, final rule, 86 FR 13024. ESMA (2021). Guidelines on marketing communications under the Regulation on cross-border distribution of funds, ESMA34-45-1272.
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Your money deserves more than a sales pitch. These are techniques, not accusations. We don't name or rate any fund or firm.