Question

A fund had $60 million under management at the beginning of January. The fund's return for January was -1.9% and the fund received $4.3 million new capital inflow at the month end.

1. What was the fund's portfolio value at this point?

2. Suppose the fund earned 5.6% return but experienced $5.3 million capital outflow for February. What was its portfolio value at the end of Feb.?

3. For March the fund earned 4.8% and there was no new inflow. What was the fund's portfolio value at the end of March?

Answer 1

1]

Value of portfolio = beginning value * (1 + rate of return) + cash inflow

Value of portfolio = $60,000,000 * (1 + (-1.9%)) + $4,300,000.

Value of portfolio = $63,160,000.

2]

Value of portfolio = beginning value * (1 + rate of return) - cash outflow

Value of portfolio = $63,160,000 * (1 + 5.6%) - $5,300,000.

Value of portfolio = $56,856,160

3]

Value of portfolio = beginning value * (1 + rate of return)

Value of portfolio = $56,856,160 * (1 + 4.8%)

Value of portfolio = $59,585,255.68