FOLIOKARMA PERFORMANCE Methodology

1. Introduction


FolioKarma applies a “SmartIndex” methodology to quantify the performance of the selected stocks in your portfolio. An Equal-Weighted Method was constructed specially for the use in FolioKarma.

2. Method description


For calculation purposes, FolioKarma is pretending that all stocks in the model portfolio are bought with an equal value at the beginning of the portfolio creation date, t1: Vs(t1) – Stock value at t1
N – Number of stocks in the portfolio
Vtotal(t1) – Total value of your portfolio at t1

Given the value of each stock, the number of shares, NSi, can be determined by stock prices at t1. NSs – Number of shares
Ps(t1) – Stock price at t1

Dividends are included in the portfolio total value. The holdings in portfolio will maintain unchanged throughout the period (always 1 year back from the current day).

The dividends are reinvested into the portfolio immediately on the ex-dates and are added to the price of the particular stock. The portfolio is not rebalanced at this point so that stock weight in the portfolio stays unchanged. Accordinly, your portfolio value at any trading day, tk , is: Vtotal(tk) – Total value of your portfolio at tk
Ds(tk) – Stock dividend at tk
Ps(tk) – Stock price at tk


3. Portfolio Performance Calculation


The performance of the portfolio at any date, tk, is equal to the portfolio value at tk divided by the initial portfolio value, then minus 1: where R(t1,tk) is your portfolio performance.
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