Investment Portfolio Performance Evaluation

Most people who contract with financial managers do not have much understanding of how much benefit paid support provides them in terms of investment return. Similarly, most people who manage their own portfolios do not know how well they are doing with respect to the rest of the financial market – they simply define a successful portfolio by a positive return on investment. The goal of this project is to provide an elegant, simple interface for people to compare different financial instruments offered by various financial managers. The key point here is ease of use. The ideal website will have an interface which is accessible and intelligible to the large majority of users who have little to no financial knowledge. The broader goal of this project is to not just compare instruments offered by financial managers, but to also compare these instruments to a user’s own portfolio. Perhaps the most interesting part of this project is the social networking aspect and potential. Along with their own portfolios, users could also see some of the contents of other user’s portfolios. The amount of information available from this service only increases as more users utilize the website. This information can be aggregated to provide interesting analytics not currently available. For example, we can see which stocks are most popular among users, along with the popularity of certain sectors and industries. We can also see which stocks among those in users’ portfolios performed best as well as those which lost the most value. We can also rank users based on their portfolio performance. This lets users examine the trading patterns of the top performing users and portfolios and compare them to their own. Through these unique analytics, we can obtain a new kind of data – the investment patterns of the average consumer. However, due to the timeframe of this project, it is not feasible to have a meaningful dataset of users to fully explore the social networking aspects. For this reason, the focus will be on individual investors and their portfolios. Portfolio performance will be examined from both a short and long term viewpoint. Performance will also be examined on the industry and sector level. Again, to maintain the tenets of clean interface and ease of use, initial comparison will strictly be on net return. Unlike beta values or moving averages for example, net return is a value even novice investors can look at and easily comprehend.