At this time of year, investors will receive mid-year investment reports. This article helps you break through the jargon, understand what you are reading and to know what it all means.
According to several expats we speak with in Europe, a proportion of investors don’t look at their reports at all. Those that do, often ask what they should be looking for to determine if their investment is performing in line with expectations.
Here are the key areas to look at:
Let’s start with the bottom line. How much is your investment worth? This should be stated clearly in your mid-year investment report. Note, the investment value should be the same as the withdrawal value; if you have an investment that has a value for the portfolio and another (often lesser) value should you withdraw, take special note. It becomes very important to pay attention to the terms and conditions. If you are unclear, speak with us.
This is an important section that summarises everything that has gone on in your investment in the last period of time. It should cover all investment income received and reinvested, any buys and sells within your portfolio assets, costs, fees, taxes, and any additions to, or withdrawals out, of the investment you have made. It can often look like a busy section but understanding the ins and outs that contributed to the value is important to understanding the performance.
Costs should be set out clearly. When you are assessing the costs, it is important to consider value rather than just price as often the cheapest is not the best. In investing, cost is always relative to performance and market volatility. The costs may include transaction costs, taxes, advice fees, custodial charges and management fees.
This is the detail of your investment portfolio, the underlying investment held. Your report should show you all underlying holdings, their weighted contribution to your portfolio and the number of units or assets you hold for you.
This is the area most people go to after looking at the valuation. You should have a total performance figure as well as a breakdown of performance of each underlying asset. The report will likely include the price at which you acquired the holdings, the number of assets or units held, the portfolio weighting, the current value and their performance including asset price change and income generation. These components comprise your total return. It should also show you portfolio return net of fees.
Terms & Conditions
It’s never too late to look at the fine print. This will often be included with your investment report or as a link. It is important to understand how your investment is structured, particularly if your investment has exit fees or other restrictions in how you can access your investments.
When you are reviewing your mid-year investment reports, if you are unsure ask us. We offer an investment report review meeting to assess your assets, to help you to understand what you have and can also offer advice and recommendations to optimise your position. Contact us at [email protected] and we will be happy to see if we can assist.