The previous two reporting series provided a deep-dive into the Equity and Fixed Income aspects of your Quarterly Report. We will now review the “report card” for your portfolio: the Performance Report. This report details the class level performance history for your portfolio for the last twelve months and since your portfolio’s inception with benchmarks provided for comparison. This report illustrates both numerical and graphical data to provide you with an overview of how your portfolio has performed. All return figures are “Gross of the Fees,” meaning returns excluding the impact of the management fee.

The top section of the report typically shows six rows of data:
• Time Periods – We show the performance data on a 12-month basis and on a “since inception date” basis, with the “inception” data being annualized, which is the performance per year since B&C began managing the portfolio.
• Portfolio Returns – The first row of actual data is the return of the portfolio (that is the combination of all accounts that make up your investment portfolio) over the specified time period before the management fee. This is weighted based on your Asset Allocation and is a time-weighted return that is the best measure to use when evaluating a manager’s relative performance. It does not take into account cash flows into and out of the portfolio.
• Benchmarks – Two benchmarks are displayed for comparing the Equity performance: The S&P 500 Index and the Dow Jones Industrial Average. We manage money with the primary goal on capital preservation and our secondary goal being growth of capital. These benchmarks are useful in evaluating your equity returns on a long-term basis.
• Equity Returns – This row details the historical performance of the stock side of your portfolio on a time-weighted basis. This is the risk side of your portfolio that is invested for long-term growth. On a 12-month basis this number can fluctuate a great deal, but over the long-term you should see positive returns closely aligned with the overall market index.
• Fixed Income Returns – This row details the historical performance of the individual bonds and/or fixed income ETFs in your portfolio on a time-weighted basis. As detailed in our previous report, these are the bedrock of the capital preservation side of your portfolio. Due to the inverse relationship of interest rates and price in fixed income, the 12-month return may be negative. However due to the fact that we are overwhelmingly “hold to maturity” investors this number should be closer to the historic average for Investment Grade Corporate Bonds.
• Cash Returns – This row shows cash returns in your portfolio, which for the better part of 5 years has been close to zero. We typically hold no more than 3% in cash in your portfolio and thus it figures into the average portfolio in a minor way.

The blue line on the graph shows the performance of your portfolio overall from the Inception Date through the Reporting Date. The bar graphs below the cumulative line show the return for the period specified. In this example the returns are shown on an annual basis, however for clients with shorter history period these bar graphs are shown in different periods (quarters or months). This helps to depict the overall impact of investing over the long-term.

The most important thing to emphasize with the Performance Report is that return is commensurate to the level of risk taken in the portfolio. Those with higher equity allocations can expect greater returns, but also greater volatility (peaks and valleys on the chart). B&C Financial Advisors works with clients to develop an Investment Policy Statement that reflects their personal goals and risk tolerance.

Sample Report Performance History by Asset Class

If you have additional questions about this report or would like to set up a meeting to review your portfolio in greater detail, we want to speak with you. Give us a call at 904-273-9850 or e-mail us at info@bandcfinancial.com.