Annualised (pa) returns

Reporting & tax
1

Hi, in the portfolio view over 2 plus years. How do I change the settings so that I can view annualised ¶ returns for historical returns performance, say 2019, 2020 & 2021 ? I note that the benchmark is displayed as pa but the portfolio summary is not annualised but only shows total return over the period split between capital gain, dividend and currency gain.

I note in the pre recorded webinar the example provide in component returns includes annualised pa returns view in the demo portfolio.

Thanks

2

Hi @Allan88, Sharesight annualises returns weighting the length of time that each capital input has been invested for, by the amount of capital invested to determine the average years invested (AYI) for each dollar of capital. Hence the return will always be reported in an ‘annualised’ format, unless these 2 conditions appear;

  1. You own a holding for less than a year;
    For example, if you own a holding only for 2 weeks and make 10%, it will be misleading to annualise it (x 52).

  2. The date range you’re looking at is less than a year.

And there is another circumstance where the ‘p.a’ symbol is not displayed even when you’re across multiple years; that is when your AYI (average year invested) falls below 12 months.
Sharesight uses dollar-weighed return methodology to calculate performance, so that means we take the timing and the size of the cash inflow/outflow into account when crunching the performance. For example, if a portfolio has $50K invested over the past 10 years (on a constant basis), but at the start of 2021, had another $200k flow into the portfolio, the portfolio performance return is not going to show ‘p.a’ because a major chunk of inflow has happened just a few months ago which has dragged the AYI down to below 12 months. Showing ‘p.a’ per annum in this case would be misleading even though the percentage return will still factor in those 10 years of investment.

Click here to read more about our performance calculation methodology.