[update: see Wikivestor - Bid-to-bid performance]
What is bid-to-bid performance when looking at unit trust (mutual fund)?
When quoting the price of an unit trust, often 2 prices appear - bid price and offer price. Bid price refers to the price that the seller will bid for the unit (the price the buyer will get when selling). Offer price refers to the price the seller will offer to sell the unit (the price the buyer pays when buying).
What such a brain-twisting way of thinking? Perhaps there was a time when unit trust fund manager think that they are more important than those buying.
Sometimes the bid price and the offer price are different. Think of the difference (called the spread) as the amount the fund manager charges for providing this product. (They are after all profit-seeking - buy low, sell high)
Back to bid-to-bid performance. When comparing performance, we usually want to take out the effect the spread. So fund manager use bid-to-bid values which give the "absolute" performance.
Beware! This may not be the performance you are really interested in. For example:
Buy
bid : 0.95
offer : 1.00
Sell
bid: 1.90
offer: 2.00
bid-to-bid performance: 100%
actual return: 90% (!)
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