We sometimes get asked, "Why does portfolio performance differ from the model performance?"

Your account is designed to track the InvestSMART model portfolios you have chosen to invest in. We operate model portfolios with specific percentages assigned to the holdings and invest in the same holdings for your account to mirror the model. When the model holdings change so to will your account holdings.

Here are some common reasons why your investment return may differ from the model portfolio you are tracking:

Income sweep: If you have the Income Sweep turned on you are having the dividends paid out to you, therefore removing that cash from your portfolio. This may make it seem like your returns are lower than they are.

Your inception date: Our published model performance figures are based on month end values. For example, model performance may be +5% from 30 November to 31 December. If you established your portfolio on the 5th November and attempted to compare performance, your return may look quite different.

Adjusting/changing investment models: If you adjust your model weights during the performance reporting period, your returns may differ to our published performance. By adjusting models during the period, it becomes more difficult to obtain a like for like comparison against model performance returns.

Adding or withdrawing funds: Adding or withdrawing funds will see InvestSMART needing to buy or sell securities/shares in your account during the month. This will see you purchase or sell securities/shares at a price that may differ from the end of month price.

Size of portfolio balance: Our models operate off percentages. The larger the size of the portfolio the easier it is to match those percentages. Some accounts holdings may vary to model security weights as the high dollar value of a security (E.g., $100-600 depending on the ETF) means we can’t buy as many as is required to get close to the model weight. These residual amounts are therefore held as cash which has the effect of dampening returns when securities are going up. Of course, where securities fall, this has the effect of improving returns relative to model.

Brokerage: The investment models do not factor in brokerage. If you add funds, withdraw funds, or change investment model’s transactions occur and so do brokerage costs.