Return (%) shows how well your investments have performed, without being distorted by any money you’ve added or withdrawn.
We can’t just compare the start and end value of your portfolio, because cash might have gone in or out at different times. If we did, it could make performance look better or worse and make it difficult to figure out how much your investments have actually grown.
To calculate your Return (%) we use the Modified Dietz Method – an industry standard for calculating investment performance. It adjusts for the timing of deposits and withdrawals:
- Money invested for longer counts more
- Money added later only counts for the time it was actually invested for
- Withdrawals are adjusted for too
Here’s an Example
- Start of year: £10,000
- June: You add £5,000
- End of year: £16,000
If we simply compare £16,000 to £15,000 (the total £ invested), it looks like a 6.7% return.
But the £5,000 was only invested for half the year.
Once adjusted, your Return (%) is about 28%.
Why the difference?
The simple method assumes your £5,000 was invested all year, which unfairly drags the return down.
Your Return (%) shows that most of the growth came from your original £10,000, which was invested the whole year. This gives you a clearer picture of how your investments have actually performed across the time you’ve been invested.
👉 That’s why 28% is a much fairer reflection of your portfolio’s performance.