Performance of Our Signature Funds

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Gains and Losses now look different in the Client Portal

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At Educators, we are committed to providing the clearest and most accurate information about your investments.

When you review your investments, you will notice a difference in the Fund Level chart: the gain/loss arrows and amounts have been removed. They continue to be used at the Account Level in the portal.

Removing gain/loss arrows and amounts makes for a more accurate depiction of your investments.

Gain/loss arrows and amounts do not accurately reflect a key fact about funds. Here’s why. The arrows and amounts are based on an investment’s book value (the price at which you bought the fund plus any added distributions). While your fund might actually decrease in value, based on your total deposits you could still be in a gain position. This issue is even more important when funds have monthly distributions (such as our Mortgage & Income Fund, Monthly Income Fund, and Money Market Fund), or funds that are primarily fixed income funds.

Here’s an example:

A gain or loss is based on the difference between book value and market value (the value of the company according to the stock market). If you invest $10,000, your initial book value is $10,000. A month from now, if the value increases to $10,100 (market value), you have a $100 gain.

However, some funds’ return come mostly from the monthly income payments that get reinvested back into the fund. So, if you invest $10,000 in the Educators Mortgage and Income Fund and every month get $100 in interest, in 12 months you will have reinvested an additional $1,200. Your book value now is $11,200. The gain or loss is now based on this book value. Even though you only contributed $10,000, the gain or loss is going to be the difference between $11,200 and whatever the market value is (which could be less than $11,200 and it may look like you have a loss even though you actually have a positive return).

This chart illustrates the example above:

Activity Units/Cost Book Value Market Value
Purchase Fund 100@$100 $10,000 $10,000
Interest (12-months) $100/month $1,200 $1,200
Interest reinvested 12@$100 $11,200 $11,200
Market value drops 112@$95 $11,200 $10,640

The market value would be $10,640 showing a loss of $560 but the account actually has had a positive return of $640.

Want more information?

You can read more about the nature of gains and losses.

If you have any questions regarding the reporting of gains or losses please contact your Educators Financial Group Financial Advisor or our Contact Centre at 1-800-263-9541 between the hours of Monday and Tuesday (8 am to 7 pm) and Wednesday to Friday (8 am to 6 pm).

Posted October 8, 2020

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