If you invest directly in stocks or in actively managed mutual funds, you should check out a recent report titled How is my Portfolio Doing… And What Should I Do About it? published by Steadyhand funds. The report shows investors how to calculate their investment performance, how to compare performance with a benchmark and what action if any investors should take based on their findings.
The Steadyhand report provides enough information in checking up on the performance of a tax-deferred account such as a RRSP. But investors need to take a further step while analyzing taxable accounts and look at the after-tax returns of the investments. They should then compare this with the after-tax returns of equivalent passive investments. For example, if investors holding Canadian large-cap stocks in their taxable accounts, should look at how they fared compared to the iShares S&P/TSX 60 ETF (TSX: XIU) on an after-tax basis.
I used to be quite religious about tracking portfolio performance. In fact, the Sleepy Portfolio started out as benchmark for my active portfolio but after a few years, I determined that I’d be better off with simply investing in securities that track the index. Now that I’m almost fully indexed, reviewing portfolio performance is low on my list of priorities. These days, I care far more about maintaining portfolio balance and keeping trading costs in check. Investment returns? I can do nothing about it and it’s completely up to the market Gods.
