How are performance metrics calculated? (Formula, Calculation, Total Invested, Total Value of Assets, Total Returns, Portfolio, Dashboards)

In this article, we will cover the formulas used by WealthBlock to display:

• Total Invested (Cost Basis)
• Current Value of Assets
• Total Return

Total Invested (Cost Basis): 

The amount invested within offers/funds.

Calculation:

• Sum of transactions - any redemptions

Example of Cost Basis:

• You invested $100,000 in Offer 1
• You invested $100,000 in Offer 2
  • Cost Basis = $200,000
• Now let's say a redemption is created for $50,000
  • Cost Basis = $150,000

    NOTE: If there are any returns, redemptions will be subtracted from the Cost Basis prior to calculating returns.

Current Value of Assets: 

The current value of the asset.

Calculation:

• (number of shares you own * current price per share) + any distributions - any redemptions

Example of number of shares: 

• The Price Per Share field of the offer lists $5
• You invested $100,000
  • You would have 20,000 shares

Example of Current Value of Assets:

• Offer Manager changes the Price Per Share to $6
• Total invested: $100,000 
• Number of shares: 20,000 (since you bought when the Price Per Share was $5)
  • Current Value of Assets: 20,000 shares * new price per share ($6) = $120,000
• Now let's say a distribution is created for $1,000
  • Current Value of Assets: (20,000 * 6) + 1000 = $121,000
• If, instead, a redemption is created for $1,000
  • Current Value of Assets: (20,000 * 6) - 1000 = $119,000
    

    NOTE: If a transaction is added as a Statement Balance, it will override any platform calculations on the asset value.

* Total Value of Assets  would only ever change if the Price Per Share field on the asset changed OR you have distributions.  This does not apply to share distributions.

Return:

The return displayed is a Time-Weighted Return.  For more information on this, we recommend checking out this article.

Calculation per period:

• (total value of assets / total invested) - 1
  

Example of Return:

• Total Value of Assets = $121,000
• Total Invested = $100,000
  
  • Return: (121,000 / 100,000) - 1 = 21%
    • The return periods are then multiplied