Hi, i’ve just started a new portfolio and was wondering why most of my ETFs seem to be underperforming relative to similar benchmarks. So i did a direct comparison and noticed this (see pic). Is that because my holdings have been grown in multiple parcels and the dollar weighted return is penalising me? I thought the benchmark return account for that.
I am noticing this exact same thing and can’t make sense out of it. Even when I make a single purchase of an ETF, it’s returns immediately diverge from my own.
Does anybody have any ideas?
Welcome to the Community @tcbrennan.
You’re correct re dollar weighting, the benchmark assumes a lump sum investment at the start of the period.
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Hi Daniel,
Welcome to the Community.
The benchmark uses the closing price of the previous day as the starting point. If your buy price doesn’t match this exactly the benchmark will show a better return.
I hope this helps. Please feel free to reach out to our support team for any account-specific questions.
Thanks for clarifying
Hi - just wondering if there are any plans to have dollar weighted (matched to the user’s dollar weighting) benchmarking - even if only comparing one investment at a time to the benchmark. It would be very useful. Thanks.
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I agree, that would be useful. I understand the logic for focussing on time weighted, but there are instances where dollar weighted would be more appropriate.