Last Updated on 5th March 2025
Our investment clients rely on our advisers and fund managers to share reports and insights showing how their assets are performing and projecting future returns. This information is vital to ensuring you are up to speed with your investment income, comfortable with the decisions you’ve made thus far, and informed when any changes would be beneficial.
The issue that we so often come across, especially for clients dealing with online platforms rather than in-person wealth managers, is that investment reports aren’t always easy to understand. In some cases, they don’t highlight potential concerns that you need to be aware of – but act as a static statement of fact rather than sharing strategic recommendations.
To improve your understanding of what investment performance reports mean and what they’re telling you underneath the figures, we’ll look at some of the terms and metrics you might see in your investment reporting – and provide tips to help you use that data to make sound decisions.
If you are in any doubt about how to interpret your investment reports, or if you’re dissatisfied with the quality and relevance of the advice you’re currently receiving, please get in touch with our expert team at your convenience.
Understanding the Main Investment Performance Benchmarks That Matter
Most portfolio reports concentrate primarily on past performance. Undoubtedly, you will want to know how your fund has changed in the past year and whether it’s meeting your expectations.
However, past performance does not guarantee that future returns will remain positive. The ideal is to produce reports that consider a range of external market conditions and factors that might influence your opportunities now and in the period to come.
Another obstacle, particularly for expats, is that your investment reports may not be in your first language, making it difficult to feel in full control of how you manage your wealth. As a quality benchmark, investors should look for reports that are:
- Easy to understand
- Inclusive of all the crucial metrics
- Accompanied by clear explanations and tailored recommendations
Risk remains a big part of your portfolio management, which means precision forecasting and advice about diversifying across asset classes are as important as the figures alone – and highlights the difference between hard-to-interpret reports that don’t help you reduce or verify your risk or show you whether your projected returns are likely to stay consistent.
Comparing Investment Portfolio Assessment Techniques
There are multiple technical ways we might measure performance, which can vary depending on your fund objectives and the types of products, equities, securities and assets within your portfolio.
For example, a short-term investment focused on a quick turnaround profit relies on immediate market prices, so the information an investor needs will differ slightly from a long-term retirement investment.
That said, visual and easy-to-understand charts showing earnings growth patterns, market volatility and interest rates can all support comprehensive reporting, depending on the types of funds or investment assets you own.
Our advisers can provide both benchmark reports, comparing fund performance to stock markets or absolute performance reports solely focused on your actual profit and weighted against your expected returns.
Let’s work through some of the calculations you are most likely to see in investment portfolio reports and what they mean.
Investment Yield
Yield shows how much income you have earned from your investment, usually over the last year, as a percentage of the original investment. The exact calculation basis depends on what types of assets you hold but basically reflects your net profit or your profit before charges are deducted.
The reason the specifics of the calculation vary is demonstrated by the below example:
- Investment stock yields are calculated based on the dividend paid in the year over the market price. If there isn’t a dividend, the stocks haven’t returned any gain.
- Bond yields, assuming the bond has been bought at the point of issue, provide a return through the interest rate paid. This calculation looks at the interest earned in the year against the value of the bond, so £50 interest earned on a bond worth £1,000 equates to a 5% yield.
As we’ve been discussing, the results of those calculations require context. High dividends against stock investments, for instance, don’t necessarily mean that the enterprise is successful and could be issued as a tactic to retain shareholders.
Likewise, high-value dividends can provide a short-term portfolio boost but might indicate a lack of reinvestment in the business, which may or may not align with your expectations.
A similar explanation is important for bond investments because bonds bought on the secondary market won’t cost the same as the initial issue rate. The yield can fluctuate depending on interest rates and market demand, so while you might have a fixed interest rate, that doesn’t always mean static returns year on year.
Rates of Return
Another familiar figure in your investment portfolio performance is often the rate of return. This calculation shows how much your fund has gone up or down in value and compares that difference against all of the revenues earned.
In practise, that means we need to:
- Calculate the total change in fund value plus all income earned.
- Divide that number over the entire investment amount.
- Use the resulting figure as a percentage to show your return.
Return rates, like yields, don’t always show the whole picture. Investments held over time will necessarily change and produce different rates of return from year to year, which means a long-term portfolio report comparing annual returns is typically far more useful.
Capital Earnings
Even if you don’t plan to trade or sell any assets in the near future, you need to know how much is tied up in your investment portfolio in unrealised gains and losses.
Those figures reflect the gains or losses made against investment assets that haven’t been sold or transferred to realise a Capital Gains Tax liability or loss you can offset against other obligations.
While changes to an investment asset’s market value might not substantially impact your immediate wealth, your adviser should disclose these figures to ensure you make educated choices about the overall value of your portfolio – and can plan for forthcoming tax exposure if you decide to make any changes.
Professional Investment Portfolio Reporting Advice
As we’ve seen, there isn’t one universal way to report on how your investment fund is performing. Investment advisers can use different techniques to evaluate returns tailored to the type of assets held and your overall objectives.
Whatever format your investment portfolio reports take, they need to be comprehensive enough to show short-term gains, identified risks, projected future performance, and the overall picture of whether your fund is hitting your primary objectives.
If you’re concerned that you aren’t receiving regular feedback about how your portfolio is performing or feel that the information isn’t comprehensive enough, we’d recommend seeking independent advice.
Chase Buchanan is a global leader in expat wealth management, assisting clients worldwide in making informed judgments about the best ways to invest their assets. Please get in touch with our nearest office for any help with your investment reports or advice about how to interpret the information you have been provided.
*Information correct as at March 2025