How to Read NJ Performance Report?

As an investor, you want to know the current value of your investments to monitor your portfolio performance. You may open the Valuation Report and look at the investment amount and its current market value to determine the returns. However, investing is not always straightforward. Becaues we switch our investments from one scheme to another and may also receive dividends. This is where things get a little complicated. To simplify the concept, let's take an example.

Suppose you invested 100,000 Rs and after 3 years, the current market value of that investment is 150,000 Rs. After a portfolio review, you decide to switch this 150,000 Rs to another scheme. Suppose the market goes down over the next six months. Now, the investment amount in your Valuation Report shows 150,000 Rs, and the current value of that investment may be only 125,000 Rs. You may think, "I invested 150,000 Rs, and now the value of that investment is 125,000 Rs. That means I have made a loss of 25,000 Rs." However, that is not the case. In reality, you invested 100,000 Rs, and the current market value of your investment is 125,000 Rs. So, you are still in profit of 25,000 Rs.

This is the limitation of the Valuation Report. But NJ has provided a great solution to this problem with their Performance Report. In my last article, I explained how to obtain a performance report. In today's article, we will understand how to read the performance report.

Calculating Investment Made Out of Pocket

Looking at the performance report given in the image below, let's focus on the first column highlighted by the red rectangle. To calculate the actual investment made out of pocket, use the following formula :

(Total Investment + Switch In) - (Total Redemptions + Switch Out + Total Dividend Received) = Investment Made Out of Pocket

NJ Performance Report Example

If we put the figures from the example Performance Report in this image, the calculation would be:

(1,39,82,336 + 12,30,049) - (62,67,204 + 12,30,049 + 5572) = 77,09,560 Rs

So this investor invested 77,09,560 Rs out of pocket.

Alternatively, we can use the following formula to arrive at the same figure :

Investment Value As On Date - Net Gain = Investment Made Out of Pocket

If we put the figures from the example Performance Report in this image, we will arrive at the same figure :

1,53,50,519 - 76,40,960 = 77,09,959 Rs

The difference of 1 Rs can be ignored since it is due to rounding off paise.

Basically, this report tells us that in the mutual fund equity market segment, the investor invested 77,09,559 Rs out of his pocket. He received 76,40,960 Rs from the market, and the total current market value of his investment is 77,09,559 + 76,40,960 = 1,53,50,519 Rs. The investor has received 15.71% annual returns.

You can perform the same calculation for other investment segments, such as MF Debt, PMS, and Direct Equity. The "Total" column in the rightmost corner of the report provides a consolidated overview of all your investments on NJ.

Conclusion

The Performance Report provides a more accurate way to track your investments and evaluate your portfolio's performance. By understanding how to read the report and using the formulas provided, you can get a clear picture of your investments and make informed decisions about your portfolio.