quartile
Quartile ranks a fund or investment against its peers by dividing them into four equal groups, from the best 25% to the worst 25%.
In plain English
"How do I know if this mutual fund my cousin recommended is actually good, or if he's just excited because it went up?" Bisi asked her friend Tunde, who works in asset management.
"Ask for its quartile ranking," Tunde said. "That tells you how it performed compared to every other similar fund, more than whether it went up."
Here is the idea. Take a hundred funds that all invest in the same kind of thing, say Nigerian equities. Line them up from the best performer to the worst, then slice that line into four equal groups of twenty five. The top group is the first quartile, the next is the second, then third, then the bottom twenty five sit in the fourth quartile.
A fund sitting in the first quartile did better than at least seventy five percent of its peers over that period. That is a far more honest report card than someone simply saying "my fund grew by 15% this year," because if every fund in that category grew by 20%, then 15% actually means you underperformed.
In the United Kingdom, platforms like Hargreaves Lansdown calmly show quartile rankings next to fund names for exactly this reason, so investors are not fooled by a good year that was actually an average year for everyone.
For a Nigerian in London sending money home and also trying to invest a bit locally, quartile ranking is the tool that stops you from bragging about a fund that merely rode a rising market while its rivals rode it even better.
A Lagos based equity fund returned 18% last year. Sounds impressive, until you learn that among fifty comparable funds, the median return was 22%. That fund actually sits in the third quartile, meaning most of its peers beat it, even though its own number looked positive on paper.
Questions people ask
Is first quartile always the best one?
Yes, by convention the first quartile holds the top performing 25% of the group, so a fund in the first quartile beat most of its competitors over that measured period.
Does a good quartile ranking guarantee future performance?
No. Quartile ranking looks backward at what already happened. A fund can sit in the first quartile one year and drop to the fourth the next, so use it alongside other checks, not alone.
Where can a Nigerian investor find quartile rankings for local funds?
Fund fact sheets from asset managers, SEC Nigeria disclosures, and comparison tables on investment platforms often show this ranking, though it is less commonly published locally than in the United Kingdom.
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