The performance of investments involves not only the purchase of securities but also the study of their further performance. The mere knowledge of the current value of the portfolio is not enough for a correct assessment. Specialized portfolio analytics tools can assist investors in performing the required calculations. At the same time, the ability to track all portfolio characteristics in one place, without leaving the trading account, becomes available if such instruments are integrated into the Demat trading account.
What Are Portfolio Analytics Tools?
Portfolio analytics tools examine the data regarding the investor’s holdings and transactions. Depending on the software, this category may include values of the portfolio, realised and unrealised returns, allocation of assets, performance of individual securities, and other information. These analytical tools help determine investment characteristics for a particular period. However, the set of available data may vary for different programs.
Why Tracking Portfolio Performance Matters
The value of an investment can fluctuate over time due to various reasons, including transfers to and from the account, price changes, dividends, corporate actions, and other events. Thus, it can be difficult to determine whether the portfolio has yielded profits or incurred losses.
For example, the growth of the portfolio may be the result of new deposits rather than the appreciation of existing holdings. In this situation, the use of analytics tools can help determine the extent to which different portfolio components affect its performance.
Realised and Unrealised Returns
A realised gain or loss occurs when an investor closes a position; that is, when the security is sold. On the other hand, an unrealised gain or loss is the difference between the current value of the security and the price at which it was bought. In other words, the former affects the portfolio value as it is already owned by the investor and can be sold at any time. An app for Demat account can help track these values separately and determine which performance has already been booked and which is still unrealised.
Understanding Absolute Returns
In absolute terms, the return on an investment is the profit that the investor makes on his portfolio. It is the difference in the value of the portfolio at two points in time.
For example, if an investor bought securities worth ₹50,000 and the value of this portfolio grew to ₹55,000, then the absolute return would be ₹5,000 or 10% (excluding transaction costs).
Portfolio analytics can automatically show such changes, thus saving investors from having to calculate everything manually.
Time-Based Performance
The length of time an investment remains in a portfolio can affect how its performance should be assessed.
For investments made at different times, simply comparing the total gain may not provide a complete picture. Some portfolio analytics tools therefore provide time-based performance measures.
Depending on the platform, investors may find metrics that account for the timing of investments and withdrawals. These measures can help provide additional context when reviewing portfolio performance.
Investors should understand the methodology used for each metric before comparing figures across different platforms.
Tracking Portfolio Allocation
Portfolio analytics can also show how investments are distributed. An investor may have holdings across different companies, sectors, asset classes, or other categories. A portfolio allocation view can show how much of the overall portfolio is represented by each category.
This information can help investors understand where their money is currently allocated. It can also make it easier to identify changes in portfolio composition over time.
The availability of allocation categories depends on the Demat trading account and the analytics tools provided by the platform.
Benefits of Having Analytics Within a Demat App
Having portfolio analytics within an app for Demat account can make regular monitoring more convenient.
- Investors can review holdings, transactions, performance, and portfolio allocation in one place instead of using separate spreadsheets or sources.
- Mobile access makes it easier to check portfolio information whenever needed.
- These tools can help investors understand changes in portfolio value and performance over time.
- Investors should still understand their investments and associated risks rather than relying only on analytics.
What Investors Should Check
Before relying on portfolio analytics, investors should understand:
- How returns are calculated
- Whether figures include applicable costs
- How dividends and corporate actions are treated
- The difference between realised and unrealised gains
- Whether returns are shown for specific periods
- How additional investments affect portfolio performance
- Which securities and transactions are included
These details can help investors interpret portfolio figures more accurately.
Conclusion
Portfolio analytics tools can help investors stay updated about their investment values, realised and unrealised gains, portfolio allocation, and time based performance. Having these features embedded in a Demat trading account can help investors get all information from a single source. An app for Demat account can further simplify portfolio tracking, but investors should understand how each metric is calculated before using it to assess performance. 5paisa provides digital investment services with portfolio-related features subject to applicable terms and conditions.
