This is the TimeToTrade help wiki. Use the TimeToTrade Trigger Trading Technology™ to execute your trades when Price, Candle Stick, Trend Line, Volume and Technical Analysis chart conditions are met - no coding required. Trade directly in the world’s global markets. Backtest your Trading Strategies. Calculate your UK HMRC Capital Gains Tax liabilities. Manage your Investment Club.
Unit Valuation System
The Unit Valuation System (UVS) was developed by Mutual Funds and Unit Trusts as a means of determining fund performance in an environment where there are frequent cash contributions and withdrawals.
The Unit Valuation System has been adopted by Investment Clubs as a means of apportioning ownership between Investment Club members as it enables club members to make flexible monthly contributions (subscriptions) and withdrawals through the process of purchasing and cancelling units; however it can also be used by individual Private Investors as a time weighted return metric.
UVS is a time weighted performance metric that is used by Investment Clubs to apportion ownership between Investment Club members. As a performance metric the Unit Valuation System strength lies in the ability to apportion ownership at any point in time, as club members buy and sell units through making subscriptions and withdrawals. It is an effective means of reflecting changes between day to day investment performance, however it should not be used as a metric for comparing investment performance between for example two Investment Clubs as it is a Time Weighted metric that can be easily eschewed (click here for an example). When comparing performance Money Weighted metrics, it is recommended that you use Internal Rate of Return calculations.
The equation for calculating Unit Value is based on net assets (which are included in the UVS calculations) divided by the number of allocated units:
Investment Club member subscriptions (or from an individual perspective, 'deposits') are used to 'buy units' based on the current unit value and if a club member wants to make a withdrawal, they then 'sell units' typically through a process referred to as Unit Cancellation based on the current unit value. Unit Cancellation can also be applied to trading expenses such as subscriptions to real time data or charting packages, in order for the Unit Value to only reflect trading performance.
Consider an Investment Club with 10 members, who normally contribute £100 in monthly subscriptions to their Investment Club fund. We are going to focus on one member of the club called 'Joe Bloggs'. If you take a look at the following table it provides an overview of the club's performance over time:
For the first 5 months, each club member contributes an equal amount of money and as the club performance increases and decreases, the unit value changes accordingly.
At the start of the first month, each member contributed £100, which is a total subscription of £1,000. The starting unit value was initially set at £1 by the club members, therefore the number of units allocated to each member was 100 (i.e. each club member's monthly subscription divided by the unit value). The club then invested the £1,000 and the end of the first month made a return on investment of £250, therefore increasing the club Net Asset Value to £1,250. At the end of the first month the unit value has now increased because the Net Asset Value has increased. The resulting Unit Value is increased from £1 to £1.25 (i.e. the end of month Net Asset Value divided by the number of allocated units = £1,250 / 1,000 = £1.25).
At the start of the second month, each club member contributes a further £100, which increases the Net Asset Value by £1,000. This time they receive less units for their £100 contribution as the unit value has increased from £1 to £1.25. The number of units that they get for their monthly subscription of £100 is 80 units, which is determined by dividing the subscription contribution by the unit value i.e. £100 / £1.25 = 80 units.
In the third, fourth and fifth months each club member continues to contribute £100 per month and the number of units they each get is based on the previous ending monthly Unit Value.
At the start of the sixth month, Joe Bloggs decides to withdraw £100 from the investment club when the unit value is £1.70. To do so he 'sells' units back to the club, which in turn cancels the units. To withdraw £100 Joe Bloggs must sell approximately 59 units at a price of £1.70 per unit. As the Net Asset Value is reduced by £100 and the number of allocated units is reduced by 59 units due to the process of unit cancellation, the net result is that the unit value remains consistent at £1.70 (i.e. the ending Net Asset Value in month 5 is reduced £100 from £6,250 to £6,150 and the number of units are reduced by 59 due to member withdrawal of £100 therefore reducing the total number of units from 3,670 to 3,611; the resulting unit value is then unchanged because £6,250/3,670 units = £6,150/3,611 units = £1.70)
For another example of unit value calculation, please click here >>
It has never been easier to execute your trading strategy. Our Trigger Trading Technology ® means you can now automatically execute your trades directly in the world’s global markets.
You need never miss a trading opportunity again!
Do you want to:
- buy when your technical analysis chart conditions are met? Really buy, not just get an email or sms alert?
- or sell when a support trend line is broken?
- or back-test your strategy going back as far as 30 years?
TimeToTrade's Trigger Trading Technology™ is truly game changing. It gives you a trading advantage. The power to take your trading to a new level.
Open a FREE TimeToTrade account today to:
- Trade UK, US and European Shares - apply now
- Execute trades when your Price, Candlestick, Trend Line, Volume and Technical Analysis chart conditions are met using the Trigger Trading Technology® - learn more - help video
- Email and SMS Trigger Trading™ Alerts - learn more
- Trade Off The Chart - learn more
- Back Test Trading Strategies with up to 30 years of historical data - learn more
- Create Simulated Trading Accounts to test your Trigger Trading™ Strategies - learn more
- Real time Forex, UK, European and US stock market data - learn more
- 170+ Technical Analysis and Candlestick Pattern Indicators - learn more
- All the tools you need to set up and run a successful investment club - learn more
- Manage your Portfolio and calculate UK HMRC Capital Gains liabilities and SA 108 CGT Tax Returns - learn more
- Create Trading Competitions for you and your friends - learn more
- Apply for a trading account today to get the Live Account Features - apply now
Apply now to try our superb platform and get your trading advantage.
The information and data provided is for educational and informational purposes only. Interpretation and use of the information and data provided is at the user's own risk. All information and data on this website is obtained from sources believed to be accurate and reliable. However, errors or omissions are possible due to human and/or mechanical error. All information and data is provided "as is" without warranty of any kind. We make no representations as to the accuracy, completeness, or timeliness of the information and data on this site and we reserve the right, in its sole discretion and without any obligation, to change, make improvements to, or correct any errors or omissions in any portion of the services at any times. Past performance is not a guarantee of future results. Trading carries a high level of risk to your capital and can result in losses that exceed your deposits. It may not be suitable for everyone so please ensure you fully understand the risks involved.
All services are provided by Mercor Index Ltd. TimeToTrade is a trading name of Mercor Index Ltd (a company registered in England and Wales under number 9479466). Our Registered address is 1st Floor, Aldermary House, 10-15 Queen Street, London, EC4N 1TX. Mercor Index Ltd is authorised and regulated by the Financial Conduct Authority number 679941.
The trading services offered by Mercor Index Ltd are not available to residents of the United States and are not intended for the use of any person in any country where such services would be contrary to local laws or regulations. Subscriptions to TimeToTrade products are available if you are not eligible for trading services.