How to Track the Performance of Your Investment Portfolio

The return of your investment portfolio is an important matter. However, when tracking that performance, you need to set the right expectations. There is no general standard that all of the investments will return a specific percentage each year or that they will behave the same.  Performance standards are moving targets and it’s important to measure investments against the appropriate standard or benchmark.

The following will help you track your portfolio’s performance:

  • Review your account statements: They show your account balance as of the closing date and the change in value since the last statement. Additionally, they show the mix of investments, transactions that happened during the period, and the realized and unrealized capital gains and losses.
  • Chose appropriate benchmarks: As defined on Finra.org a benchmark is an indication of the overall direction of the market either as a whole or of particular market segments. Use a benchmark that tracks similar investments.  It is important to know what the comparison point is and to understand what that comparison means. Index funds and exchange –traded funds (ETFs) already track an index, they do not need to be benchmarked. According to Finra.org the indexes listed below are frequently used:
  • Dow Jones Industrial Average. The most widely cited measure of the market, tracks the performance of 30 stocks of large, well-known companies.
  • S&P 500 Index.Tracks 500 stocks of large-company U.S. companies and is the basis for several index mutual funds and exchange-traded funds.
  • Russell 2000.Tracks 2,000 small-company stocks and serves as the benchmark for that component of the overall market.
  • Dow Jones Wilshire 5000.Tracking over 5,000 stocks, it covers all the companies listed on the major stock markets, including companies of all sizes across all industries.
  • Lipper Fund Indexes.Calculates several indexes tracking different categories of mutual funds, such as Growth, Core, or Value funds
  • Barclays Capital Aggregate Bond Index(formerly Lehman Brothers Aggregate Bond Index). This is a composite index that combines several bond indexes to give a picture of the entire bond market.
  • Use other tools available to you: Analysts at brokerage or independent research firms, as well as, the mutual funds companies or companies issuing stocks usually issue recommendations on their research reports which are publicly available. You can use these reports to form your own criteria.

While it is important to pay attention to the markets and your investment accounts on a regular basis, you don’t need to over-do it.  Examine the returns over long periods of time, ideally several years vs. one year or one quarter.  Keep in mind that short-term results can be misleading because a particular company or fund may have behaved differently in comparison to its benchmark.

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This represents a partial list of clients. They have not been compensated and were not selected based on duration, performance, account size.