Do you have questions about Six Park’s performance?
This article provides answers to five frequently asked questions about the performance of Six Park’s portfolios.
Why is the return in the monthly performance updates different to what I see in my client dashboard?
We calculate the performance of our portfolios using several different methods.
Time-weighted returns are published in our monthly performance updates via email and on our website.
This is the most common way for fund managers to measure performance. It assumes you invested a fixed amount and hold onto it for a period of time, like one year, three years or five years.
Comparing time-weighted returns can help you see how your investment is performing relative to others with the same investment amount and/or within the same fixed period.
Your client dashboard shows the yearly return of your portfolio based on dollar-weighted return (also referred to as a ‘money-weighted return”).
A dollar-weighted return measures investment performance taking account of the size and timing of cash flows. This information can be particularly helpful if you are making regular investments.
Your actual returns as shown in your client dashboard may also differ from our published returns depending on:
- The timing of when you invested. The time-weighted returns in our monthly performance updates assumes that all funds were fully invested at the start of the relevant period – but even a day or week’s difference can lead to different returns;
- Whether you have dividends owed but not received. Your client dashboard shows your returns on an accrual basis, so any owed dividends will be shown even if you haven’t received the funds yet;
- Whether we are phasing in the ETFs in your portfolio because your portfolio is less than $10,000.
If you want further information about your portfolio performance and performance calculation methodologies, you can access detailed reporting from Sharesight via your client dashboard under the ‘Reporting’ tab.
Why does my portfolio value not add up to my deposits + returns – fees and taxes ?
There are two possible reasons why your portfolio value does not exactly match deposits and returns minus fees and taxes.
1. There are dividends owed but not received
Your client dashboard shows your returns on an accrual basis, so any owed dividends will be shown even if you haven’t received the funds yet.
2. Non cash sources of income from ETFs
Some of the ETFs you’re investing in distribute non-cash income such as franking credits and foreign tax credits. These are not received as cash but the information is captured in your return, so, you’ll need to claim them on your tax return.
We can help provide all of this information at tax time.
My returns are negative, should I be worried? What should I do?
We understand that it can be concerning to see short term dips in the value of your portfolio.
Unfortunately, stock market declines are a normal occurrence. If you’re a new investor, it is usual to see your portfolio’s returns go up and down during the first year.
Over the long term, historical market returns demonstrate that markets ultimately rise over time. Investors who ride out market fluctuations are generally rewarded for their discipline and patience.
It takes time to see your returns align with the long term trend.
Another way to mitigate risk is to ensure your portfolio is well diversified, so you can spread the risk across various asset classes with different levels of risk and reward.
That’s why our portfolios are designed for medium to long term investment horizons (typically three years or more) and are diversified across different assets.
Should I change my investment strategy to achieve better returns?
We recommend that you review your investment profile whenever there is a change in your goals, investment timeframe and ability to take on risk.
We do this analysis annually for our clients to ensure that you are in the best position to achieve your financial goals.
While it can be tempting to switch portfolios when something else is performing better, in our experience staying the course is a better approach. In our view, trying to time the market is extremely difficult and typically results in relatively poor investment outcomes.
By switching you may be taking on more risk than you should be, or you may find that switching portfolios doesn’t help you to reach your financial goals any faster.
If you would like to review your portfolio strategy you can re-take the online assessment at any time. Just click on the ‘Review Portfolio’ button under the ‘Overview’ menu tab on the left hand side of the client dashboard.
Note that changing your portfolio strategy (and the underlying investments) may create capital gains tax liabilities. You can access an “Unrealized Capital Gains” report in the Reporting section of your Six Park dashboard.
Can I remove one of the assets in my portfolio that has negative returns, or add more money to an asset that has performed well?
Unfortunately, no.
We provide you with a globally diversified portfolio with pre-set target allocations for each of the investments within the portfolio. These allocations have been carefully determined by our Investment Advisory Committee to try to generate the optimal return profile for a given level of risk exposure as markets fluctuate up and down over time.
We try to help clients avoid trying to time the market and deciding whether to sell or buy individual shares or assets. Instead, by investing in a variety of different assets (and a long-term investment horizon) you are spreading your risk so as to not have all of your investment “eggs in one basket”. This can help protect your overall portfolio from large losses and give you more opportunities for long-term success.
We also look after the rebalancing of your portfolio every quarter. When your portfolio becomes too over-invested in one particular asset class, we will sell a small percentage of that investment and reallocate the funds to an underperforming asset class. This ensures that you are taking advantage of an asset class that is performing well and avoids over-investment.
Where can I find more information about my portfolio’s performance?
We use Sharesight to provide you further insights about your portfolio’s performance. You can access detailed reporting in your Six Park dashboard via the ‘Reporting’ tab.
If you have any specific questions, please reach out to our Client Services Team at [email protected].
This article may contain general financial product information but should not be relied upon or construed as a recommendation of any financial product. This information has been prepared without taking into account your objectives, financial situation or needs.
For further details on our service please see our Financial Services Guide at http://www.sixpark.com.au. Past performance is not a reliable indicator of future performance.