What is the best way to calculate fund past performance?

The Investment Association (IA)'s plans to overhaul how funds' past performance is calculated has sparked debate among investment managers.

The implementation of the RDR at the end of 2012 has challenged the way long-term fund performance is measured, as investors seek to combine track records for pre-RDR bundled share classes – where higher fees dragged on performance – with returns produced by ‘clean’ share classes launched post-RDR. Earlier this month, the IA reiterated its 2012 guidance, which said clean share classes should use the track record of pre-RDR bundled share classes when calculating past performance – without adjusting for the lower fees now being levied post-RDR. However, it also noted that those funds wh...