Variations in performance for club members
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Variations in performance for club members We started a club 2/09; most people are contributing about the same every month. Most have the same returns (all around 15%). But one member who has contributed regularly is showing a -13%. As the treasurer I have gone over her transactions, and see nothing incorrect. How can this be? Ellen,
Your club member has already contacted support about this question. It is
entirely possible for this to happen. The people who are showing 15% returns
contributed twice as much as the other member at the beginning, when the unit
value was $10 per unit. Thanks to the performance of your club, the unit value
has gone up drastically from that original figure. Since the one member didn't
pick up as many units at the original low value, her performance suffers. This
shows that market timing can be a factor in an individual's performance,
particularly when the club is starting out. As the months go by, this
imbalance will decrease.
Rip West
Saint Paul, MN Ellen,
There is one other factor which I failed to mention. The difference would
not be so great if the original $50 per member were not classified as fees.
There is really no need to do this for a beginning club. Sometimes clubs that
have been in existence for a long time, charge an initiation fee of $25 or $50
to compensate the older members who have contributed more in the startup
expenses. Again, for a new club, there is no reason to do this. NAIC used to
recommend that clubs charge fees, out of which administrative expenses would be
paid, but that advice has been discredited, and is no longer recommended. If you
were to go back and change the $50 fee from each member to a payment buying
units, the difference would not be so great.
Rip West
Saint Paul, MN I still believe there is an error in Linda's McDonald's units. I do a Member Status back to the date of 2/10/09 when we hade no money in and $10/unit. On 2/11/09 1 unit =$18.253227, she has contributed $75.41 but she is assigned 2.541 units. Seems to me she should have 4.3 units. Ellen Rip West wrote: > Ellen, > > > There is one other factor which I failed to mention. The difference would > not be so great if the original $50 per member were not classified as fees. > There is really no need to do this for a beginning club. Sometimes clubs that > have been in existence for a long time, charge an initiation fee of $25 or $50 > to compensate the older members who have contributed more in the startup > expenses. Again, for a new club, there is no reason to do this. NAIC used to > recommend that clubs charge fees, out of which administrative expenses would be > paid, but that advice has been discredited, and is no longer recommended. If you > were to go back and change the $50 fee from each member to a payment buying > units, the difference would not be so great. > > Rip West > Saint Paul, MN > <<
On 2/11/09 1 unit
=$18.253227, she has contributed $75.41 but she is assigned 2.541 units. Seems to me she should have 4.3 units. >> That is the problem. she contributed 75.41, but of that amount $50 was a
fee and therefore, received no units. If you will reclassify all those original
fees of $50, she will get credit for the total 75.41 in units.
Rip West
Saint Paul, MN |
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