The summary and detail Test Portfolio (TP) return performance statements provide:
- Monthly data from the TP brokerage statements regarding opening and closing account values, withdrawals, and deposits,
- The monthly investment gains and losses implied by these figures, and
- Calculation of monthly returns, based on the assumption that all deposits are made at the beginning of the month and all withdrawals are made at month end.
In other words, monthly returns are calculated simply by dividing {monthly investment gains and losses} by {beginning of the month account equity plus deposits} . This methodology understates TP returns during months with a positive return, while overstating returns in negative months. Because the preponderance of the TP’s monthly returns have been positive, the net result is a significant understatement of overall TP returns.
"Monthly investment gains and losses", as used in this calculation, is a comprehensive figure that includes all changes in account equity other than those arising from deposits and withdrawals. This definition differs from the one used in brokerage statements that break out such items as margin interest and dividend income in detail.
In addition to presenting gross returns, the Detail Statement also shows how these returns would be affected by a hypothetical quarterly asset management fee of .375%. Note that this fee is roughly 50% higher than Oyster River Financial, LLC’s (ORF’s) maximum fee of .0833% billed monthly to individual investors with account equity of $100,000 or more. (0.375% x 4 quarters = 1.5%, whereas 0.0833% x 12 months = 1.0%.)
Important performance-related disclosures are presented in the Performance section of this site and in the Data Driven Investing book. Understanding of all such disclosures is a critically important prerequisite to understanding the conclusions that may be drawn from the TP’s performance history. Past performance does not guarantee future performance. The TP’s returns have NOT been audited by an independent third party.
The Test Portfolio Performance Statements are located on the Oyster River Financial, LLC website. Click here to obtain the statements.