6.2. The Equity Curve and Its Returns
The Equity Curve tab opens on the chart we met in section 2.4: Portfolio, Capital invested and Nifty 50 over time. Above the chart, the buttons 1M, 3M, 6M, 1Y, YTD and MAX set the stretch of time it shows: the last month, three months, six months or year, this year so far, or the whole history.
Below the chart, a table measures the portfolio's return in several ways. Figure 6-2 shows the row for the whole history.
Returns
4 Oct 2024 to 16 Oct 2026
| Time-weighted | Money-weighted | Amounts | Risk | ||||
|---|---|---|---|---|---|---|---|
| Return | Annualised | Return | Ann · XIRR | Absolute | Capital added | Max drawdown | |
| Since inception | −6.2% | −3.1% | −2.4% | −1.2% | −₹1.00 L | ₹50.56 L | −21.3% |
Why More Than One Return
Measuring a portfolio's return sounds simple: compare what it is worth with what went in. The difficulty is that money goes in at different times. Capital added just before a rise looks very different from capital added just after one. The table measures the return in two ways, each answering its own question.
Time-weighted return answers: how well did the holdings do, whatever the timing of the money put in? It chains together each day's return, and starts the chain afresh at every addition of capital, so adding money never counts as a gain. Annualised expresses it as a yearly rate. For our example: −6.2%, or −3.1% a year.
Money-weighted return answers: how did the money actually invested fare? It weights each rupee by how long it was invested, so the timing of your additions counts. Ann · XIRR is the same as a yearly rate, worked out from the dated amounts that went in. For our example: −2.4%, or −1.2% a year.
The two can differ a good deal, because they answer different questions. Reading them side by side is more useful than either alone.
Amounts and Risk
- Absolute is the gain or loss in rupees, with the capital added taken out: a loss of ₹1,00,420 for our example.
- Capital added is the money moved in from outside over the period: ₹50.56 lakh.
- Max drawdown is the deepest fall from a high point to a later low within the period: −21.3% for our example.
Since Inception and Selected
The table has two rows. Since inception covers the whole history. Selected covers the stretch the chart is showing, so a button such as 1Y gives you the same measures for the last year.
Next, let's look at your results month by month.