Hi
What I would really like to know is whether my individual investments are under-performing or out-performing the index. So, for each investment what was the index return over the holding period as a percentage, compared with the investment return as a percentage. The difference is my over/under performance for that investment. Perhaps an annualised figure might also be useful.
As a bonus it would then be useful to charted this under/over performance for a portfolio. I guess for a specific date the total over performance would be the sum of the individual investment over/under performances to date, weighted by the size of the initial investment? Not sure how to deal with closed investments though.
I know you can plot your % return against an index, however this can produce pretty silly results. One of the first investments I made in one of my portfolios was very small and speculative and quickly halved in value creating a very negative % return. Since then I have invested a lot more money and made much better returns. However the graph of % return vs the index seems to be massively skewed due to this poor initial investment which was large in % terms at the time but minuscule in $ terms today. The inverse also happened later when I made a larger investment which seems to have lowered my percentage return vs the market, presumably because it represents a larger portion of my overall investments but the return is small due to being in the market for a very short time? Or maybe it was just a bad investment - its kinda hard to tell.
Cheers