As an Aristocrat you now have a new and highly meaningful return metric at your disposal in the performance matrix – the internal rate of return, or IRR for short.

From total return to the internal rate of return

Until now the matrix only reported the plain total return over the selected period. That figure had a catch: it ignored how long your money had actually been invested. A quick example. A total return of 10 % may sound good at first glance. But if you earned those 10 % over three years, it works out at only about 3.2 % a year – considerably less than earning the same 10 % in a single year.

To make the return figures far more meaningful and comparable, we have now added the internal rate of return.

What exactly is the internal rate of return?

Put simply, it is the average annual return on your investment. The great advantage of this metric is that it accounts precisely for when money moved and how much of it. Every purchase, every top-up, every sale and of course every dividend received goes into the calculation on the day it happened.

The result is what is known as a money-weighted return, and it shows you how strongly the capital you actually put to work compounded per year. That means your return can now be compared directly with other investments – with the interest rate on your savings or fixed-term account, for instance, which is always annualised too.

How to use the new figure

You can display the internal rate of return for individual securities and for all of your portfolios. You also choose the period yourself:

• The entire holding period: set the range to "Max" and you see the return for each security from the very first purchase date through to today, or through to the sale of the whole position.
• Individual periods: want to know how your portfolio or a particular security did in a given year? Simply pick the matching range.

When the cell stays empty

The calculation needs two things. If either is missing, we deliberately leave the cell empty rather than show a number that will not hold up:

• Recorded transactions. For positions you have only maintained with a quantity and a purchase price, we do not know a purchase date – and without one there is no way to say how long your money was working. If you want figures here, add the transactions or import them.
• At least three months of holding period. This threshold applies per position, not to the selected range, so a share bought only a few weeks ago stays empty even on "Max". The reason is simple: because the internal rate of return extrapolates to a full year, shorter periods would produce extreme and unrealistic values. A sharp price rise over a few weeks would extrapolate to astronomical (or deeply negative) returns with no meaning at all.

One more note: fees and taxes are not yet included in the calculation.

We hope you like the new return metric!

We wish you further good dividend yields

Max & Johannes