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How is my performance calculated?

Openfolio uses a time-weighted return methodology for calculating performance. This is a measure of the historical performance of an investment portfolio which compensates for external flows. (External flows are net movements of value which result from transfers of cash, securities or other instruments, into or out of the portfolio, with no simultaneous equal and opposite movement of value in the opposite direction, as in the case of a purchase or sale, and which are not income from the investments in the portfolio, such as interest, coupons or dividends.)
To compensate for external flows, the overall time interval under analysis is divided into contiguous sub-periods at each point in time within the overall time period whenever there is an external flow. The returns over the sub-periods between external flows are linked geometrically (compounded) together, i.e. by multiplying together the growth factors in all the sub-periods. (The growth factor in each sub-period is equal to 1 plus the return over the sub-period.)


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