The Fund employs the Time-Weighted Return (TWR) method for an objective evaluation of its performance. This approach is particularly effective in providing an accurate measure of the fund’s investment returns, eliminating the distorting effects of external cash flows.
Fund Share Valuation
Fund shares are a representation of ownership in the demonstration fund. The Net Asset Value (NAV) per share is calculated regularly, reflecting the growth in the fund’s capital. The formula used for this calculation is:
\[ \text{NAV per Share} = \frac{\text{Net Asset Value (NAV)}}{\text{Number of Issued Shares}} \]Each additional capital contribution to the fund results in the issuance of new shares at the current NAV per share. This issuance can dilute the proportion of existing shares, impacting their relative growth potential as measured by TWR.
Dilution Impact and Share Value Regression
The ongoing issuance of new shares tends to regress the share value to its mean over time. This dilution effect is a key factor in the fund’s design, as it can help in reducing the price volatility of shares. The goal is to achieve a stable share price trajectory, enhancing the investment appeal of the fund in external markets.
Current Performance Metrics
On June 1, 2022, the fund had issued 500 shares, each valued at approximately $1 or ~0.00055 ETH. The current metrics are as follows:
Current Number of Shares in Circulation: 12,830.
Current Market Price per Share: 0.00046 ETH.
Acquisition Price per Share: 0.00052 ETH.
Performance (in ETH terms): -11.86%.