• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

Median trackers

B

Bidza

Member
Hie guys,Im getting a bit confused with the terminology.What exactly is a median tracker fund?
 
Median Tracker Fund

Let me explain you the concept of median tracker fund with the following example:

Suppose you are a fund manager with a mandate to run a fund by selecting stocks only from FTSE100 constituents. Number of stocks, weightage to each stock is your choice as a fund manager.

Now, among many ways to benchmark or evaluate your actual fund's performance, one way is to compare your actual fund performance with the simulated median tracker fund.

For this, you can run several simulations of fund performance by using various assumptions. For e.g. weight to each stock can be (1/n) assuming 'n' stocks in the fund or weight is the value-weight (as normally in case of indicies like FTSE100 or S&P 500). Another assumption can be related to probability of selection of stock from FTSE 100 (say 1/100).

Once you run various simulations you can find the median of the performance of the simulated funds. Then your actual fund performance can be compared with the median performance of the simulated fund.

Hope this helps. You can reply me back if you still have doubt.
 
You must log in or register to reply here.
Back
Top