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Percentile Fan Chart
Definition
A percentile fan chart displays the results of Monte Carlo simulation as a set of lines or shaded bands representing different percentiles of the distribution at each projection year. Typically shown are the 10th, 25th, 50th (median), 75th, and 90th percentiles. The bands fan outward over time, reflecting the increasing uncertainty of outcomes at longer horizons. The gold or bolded median line provides the central reference point, while the outer bands communicate the range of possible outcomes.
In the Context of Endowment Management
For board and investment committee presentations, the fan chart is the most intuitive visualization of simulation results. Committees can see at a glance the range of possible outcomes, the central tendency, and the downside risk. A typical observation might be: "The median projection shows the endowment reaching $247M, but there is a 10% probability it falls below $141M — and that is the outcome we need to plan for."