Dictionary
Financial Glossary
|
 |
| Glossary
> Q
> "Quartile" Definition |
 Quartile
A statistical term describing a division of observations into four defined intervals based upon the values of the data and how they compare to the entire set of observations.
Most UK funds are grouped into specific sectors as defined by AUTIF, with each sector being divided into four quarters or quartiles. The midway point is known as the median; all funds want to see their performance stay above the median but the real target is to be consistently in the top quartile (i.e. the top 25% of all funds in that particular sector). To use a soccer analogy, The top quartile is like being in the premiership and is the place to be.
The investment industry ranks the performance of collective funds on the total returns (income + growth) they have produced for investors. The rankings divide the funds into sectors, so that growth funds are compared together, income funds are compared together, and balanced funds are compared together. The rankings list the funds in descending order, and the list is divided into four "quartiles".The best performing 25% are in in the "1st quartile"The next best performing 25% are in in the "2nd quartile"The next best performing 25% are in in the "3rd quartile"The worst performing 25% are in in the "4th quartile"So, if a sector contains 36 trusts, each quartile will contain 9 trusts. Trusts often advertise their performance over various periods by indicating, say, a first quartile ranking. In the above case that would indicate a position in the top 9.Investors need to be aware that when unit trusts advertise their past performance, they invariably select statistics that show them in a good light. Specific examples:Showing performance between two carefully selected dates. Look in the small print where they have to show a five year figure.Portraying the fund as a top performer, but only comparing growth figures with a small selection of rival firms.Failing to compare the figures with those of any rivals at all.Claims like "leading ISA provider", "top performer" and "ranked first" which have ambiguous meanings. "Ranked first", for instance, could mean that it was in the first quartile of performers which, in a field of 400, could mean that it was the 100th best performing fund.
|
|
Glossary 
|
|
|
|
Quartile - A statistical term describing a division of observations into four defined intervals based upon the values of the data and how they compare to the entire set of observations.
Most UK funds are grouped into specific sectors as defined by AUTIF, with each sector being divided into four quarters or quartiles. The midway point is known as the median; all funds want to see their performance stay above the median but the real target is to be consistently in the top quartile (i.e. the top 25% of all funds in that particular sector). To use a soccer analogy, The top quartile is like being in the premiership and is the place to be.
The investment industry ranks the performance of collective funds on the total returns (income + growth) they have produced for investors. The rankings divide the funds into sectors, so that growth funds are compared together, income funds are compared together, and balanced funds are compared together. The rankings list the funds in descending order, and the list is divided into four "quartiles".The best performing 25% are in in the "1st quartile"The next best performing 25% are in in the "2nd quartile"The next best performing 25% are in in the "3rd quartile"The worst performing 25% are in in the "4th quartile"So, if a sector contains 36 trusts, each quartile will contain 9 trusts. Trusts often advertise their performance over various periods by indicating, say, a first quartile ranking. In the above case that would indicate a position in the top 9.Investors need to be aware that when unit trusts advertise their past performance, they invariably select statistics that show them in a good light. Specific examples:Showing performance between two carefully selected dates. Look in the small print where they have to show a five year figure.Portraying the fund as a top performer, but only comparing growth figures with a small selection of rival firms.Failing to compare the figures with those of any rivals at all.Claims like "leading ISA provider", "top performer" and "ranked first" which have ambiguous meanings. "Ranked first", for instance, could mean that it was in the first quartile of performers which, in a field of 400, could mean that it was the 100th best performing fund.
Quartile : a statistical term describing a division of observations into four defined intervals based upon the values of the data and how they compare to the entire set of observations.
most uk funds are grouped into specific sectors as defined by autif, with each sector being divided into four quarters or quartiles. the midway point is known as the median; all funds want to see their performance stay above the median but the real target is to be consistently in the top quartile (i.e. the top 25% of all funds in that particular sector). to use a soccer analogy, the top quartile is like being in the premiership and is the place to be.
the investment industry ranks the performance of collective funds on the total returns (income + growth) they have produced for investors. the rankings divide the funds into sectors, so that growth funds are compared together, income funds are compared together, and balanced funds are compared together. the rankings list the funds in descending order, and the list is divided into four "quartiles".the best performing 25% are in in the "1st quartile"the next best performing 25% are in in the "2nd quartile"the next best performing 25% are in in the "3rd quartile"the worst performing 25% are in in the "4th quartile"so, if a sector contains 36 trusts, each quartile will contain 9 trusts. trusts often advertise their performance over various periods by indicating, say, a first quartile ranking. in the above case that would indicate a position in the top 9.investors need to be aware that when unit trusts advertise their past performance, they invariably select statistics that show them in a good light. specific examples:showing performance between two carefully selected dates. look in the small print where they have to show a five year figure.portraying the fund as a top performer, but only comparing growth figures with a small selection of rival firms.failing to compare the figures with those of any rivals at all.claims like "leading isa provider", "top performer" and "ranked first" which have ambiguous meanings. "ranked first", for instance, could mean that it was in the first quartile of performers which, in a field of 400, could mean that it was the 100th best performing fund.
