How is the profit/loss calculated on my Revix account?
The profit/loss on your Revix account is calculated using the Time-Weighted Return (TWR) method. This method accounts for the timing of your investments and excludes the impact of any cash inflows or outflows to provide a fair assessment of investment performance.
This approach helps in comparing the performance of different investments over a specific period.
To calculate TWR we do the following:
We break down the measurement period into sub-periods. Each sub-period begins on the day after a cash inflow or outflow and ends on the day of the next cash flow or the end of the total period, whichever comes first.
We calculate the return for each sub-period, which is the ending value minus the beginning value and then divided by the beginning value.
We compound the sub-period returns together to get the TWR. You do this by adding 1 to each sub-period return, multiplying the results together, and then subtracting 1 from the final result.
This approach helps in comparing the performance of different investments over a specific period.
To calculate TWR we do the following:
We break down the measurement period into sub-periods. Each sub-period begins on the day after a cash inflow or outflow and ends on the day of the next cash flow or the end of the total period, whichever comes first.
We calculate the return for each sub-period, which is the ending value minus the beginning value and then divided by the beginning value.
We compound the sub-period returns together to get the TWR. You do this by adding 1 to each sub-period return, multiplying the results together, and then subtracting 1 from the final result.
Updated on: 18/05/2023
Thank you!