How does Selma calculate returns?

Updated 3 months ago by Carina Wetzlhütter

Selma does not only use one method to calculate your returns, but shows you different returns at different places in the service to give you the most transparent information possible.

Let’s look at the two different return calculation methods used.

Time-weighted return 

Time-weighted return measures the return of investments over a given period of time. It means it shows you the return one unit makes from the start of investing until now.

It is not affected by additional investments or withdrawals on your account. 

It’s great to evaluate performance on a general level. 

What’s the advantage? 

Time-weighted return gives a good indicator of the compound growth rate of your investment mix. And it allows you to compare the performance of your investment mix (portfolio) with others as it does not take adjustments, added money or withdrawals into account.

Money-weighted return 

Money-weighted return places emphasis on “money” and measures returns by taking size and timing of additional investments or withdrawals into account.

It allows you to understand the returns of specific investment categories or funds within an investment mix. 

What’s the advantage?

Many of Selma’s clients invest regularly or even monthly. Sometimes the amounts also differ month to month. The money-weighted return shows an understandable number even if you buy an investment multiple times and your investment grows.

Therefore this number is great on a holistic level, giving you a realistic picture of how your investments develop. 

If you do not add money after your initial investment or take money out of your account, both returns will be the same.

Where can I find which return? 

Time-weighted return:

  • Home view
  • Total gain / loss on investments view

Money-weighted return:

  • Investment categories on “Simple” investments view
  • Investment funds on “Advanced” investments view

Note: The return shown in Swiss Francs is always the effective return.

This number simply compares the number of all your contributions / withdrawals with the current value of your portfolio. 

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