Portfolio Returns Term Explanation

Q&A
1

Hi Evan,

Very much hoping you can shed some light on the portfolio returns definition terms used in the daily calculations which I am not quite familiar with

eg
suppose in late 2017 I started a portfolio which I regularly added the stocks transaction details whenever i bought or sold over the years till today. As per my report yesterday the following calculated returns reflected in my portfolio was

Time - Weighted = 18.44% ( YTD ) , 30.40% ( All )
Xirr= 21.63% ( YTD ) , 13.69% ( ALL )

My questions are

  1. Do these figures take into account all cash inflows/outflows and their corresponding invested periods accordingly?
  2. Which figure is the one I should be using if i am interested in knowing my Annual Average of Return since late 2017?
  3. Could pls elaborate what is Time Weighted returns ? and the difference between YTD and All ?
  4. Also XIRR ?
    I have tried looking up and most of the info shows mathematical formulas which doesnt really help me. Would appreciate if you could come up with some simple illustration for 3) and 4) .

Thanks!
ET

2

Hi ET,

Give me some time. I will answer them over the weekend. Maybe write up some article/tutorial since many would be interested in them as well.

Thanks,
Evan

3

Thks Evan. That would be great ! Cos i have asked a few friends using stockcafe and they would like to know too.

4

Hi, Was wondering if the article is out …as I would like to read it too. thanx

5

Ah… sorry, give me more time. Will work on it. Thanks!

6

Hi,

Sorry for the delay!

Wrote up this tutorial -> https://stockscafe.academy/447/returns-definitions/

Hope it helps.

Cheers,
Evan

7

Thanks Evan for the write up. It helps clarify.

1 Like
8

Great. Thank you .

9

Thanks for the write up, Evan. If I could summarise the meaning of “Overall XIRR” in English as used in the Reports page, and assuming an overall XIRR of 10%, would it mean that if I invested $100 in my portfolio on Jan 1 2021, I would have $110 on Dec 31 2021? Therefore it is annualised, as opposed to Overall TWR, which refers to the absolute growth of the portfolio from inception to the current date?

Kindly clarify if my understanding it wrong, thanks!

10

If I could summarise the meaning of “Overall XIRR” in English as used in the Reports page, and assuming an overall XIRR of 10%, would it mean that if I invested $100 in my portfolio on Jan 1 2021, I would have $110 on Dec 31 2021? Therefore it is annualised

This is correct in my understanding.

Overall TWR, which refers to the absolute growth of the portfolio from inception to the current date?

In my understanding, this is basically correct except the “absolute” part. Not sure if we have the same understanding of absolute here but TWR ignores the “size” of portfolio.