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by Jonathan AnthonyYour Guide to Building Powerful Portfolio Reports
Professional financial managers have nicely packaged reports detailing everything about your performance and risk. But for those of us managing our own investments, building a portfolio report is our responsibility.
Fortunately, all the data, technology, and resources you need to build accurate and effective portfolio reports are readily available these days.
In this article, we’ll show you how to build the reports you need for your investing portfolio. You’ll learn the basics, key aspects, and best practices to ensure you’re getting the most out of your data.
Portfolio Report Basics
A portfolio report is a comprehensive document comprising various details on your investment’s performance and risk exposure.
These reports provide the essential data and analyses you need to make the best decisions possible to support your investing goals.
Here are some of the critical elements of a portfolio report:
- Summary reports give you an overview of everything that happened with your portfolio during the reporting period. For most investors, this information is enough.
- Performance reports provide details about gains and losses during the reporting period and for the portfolio’s lifetime.
- Attribution/contribution reports describe how each investment contributed to your overall gains and losses, so you can spot the top performers and the dead weight.
- Benchmarking indicates how your portfolio performed compared to standard indices. This metric calculates formula-based indicators such as alpha, beta, standard deviation, Sharpe ratio, R-squared, and more.
- Allocation reports provide details about portfolio diversification, including breakdowns of asset types and stock sector exposure.
- Risk assessment reports help you ensure your risk exposure matches your risk tolerance and that your gains justify your risks.
- Transaction reports give you insight into how often you’re trading and how much you’re spending on management fees and trading commissions.
- Market summary reports describe what occurred in the wider markets during the reporting period, which adds further context to your portfolio results.
- Back-in-time reports help you analyze performance across custom date ranges in the past, not just the previous reporting period.
Building Effective Portfolio Reports
Here are some things to keep in mind when building your own portfolio reports:
Data Sources
Portfolio reports are only as effective as the data they contain. Your tracking software should automatically update account balances based on data from your banks, brokers, and other investment sources.
If your portfolio is simple, this might seem like a minor deal. If it’s complex with many components, it’s easy to become overwhelmed with this process and allow data to slip through the cracks.
Automation here makes the reporting process much simpler.
Key Metrics
Next, you must ensure you include all relevant metrics and indicators. As described above, portfolio reports can consist of various specific reports about performance and risk.
If you’re missing essential elements in the reports you build, you could make blind decisions.
That doesn’t mean your report should be a thousand pages. The point is that you want to cover the key performance and risk metrics.
Individual Preferences
A lot is going on in your data. Your report should function as a filter, breaking the information into a format that is actually useful to you and suits your preferences and learning style.
If your reports include every possible data set and analysis, they’ll make your life harder, not easier.
If you learn better with charts and graphs, use those. If you are most comfortable with written narratives, use those instead. Portfolio reports are useless if you don’t understand the information they contain.
Investment Objectives
Long-term and short-term investors have drastically different strategies and information needs, so always customize your reports to match your goals.
As a long-term investor, you must focus on broad trends and indicators. Portfolio reports can filter out all the short-term noise that fills the news cycle.
Short-term trends and events are practically meaningless to you unless you’re nearing retirement. Stock market crashes are opportunities, not disasters.
In this context, it’s important to design your portfolio reports in a way that will help protect your sanity and reduce anxiety.
Risk Tolerance
Risk exposure can creep up on you if you don’t stay vigilant. Stocks can become more volatile, and your efforts to rebalance your portfolio can cause diversification problems.
Risk is acceptable, but only if it matches your risk tolerance.
Your portfolio reports should include key risk assessment indicators so you can clearly understand how much risk you’re exposed to, which helps you rebalance accordingly.
Report Generation
Theoretically, you could generate your portfolio reports manually. You could get some graph paper, sift through all your statements, tabulate everything on a calculator, and painstakingly draw charts and type up reports. Of course, this would be ridiculous, but it’s theoretically possible.
In reality, you will get portfolio reports from two likely sources.
- If you have a financial advisor, they will provide you with neatly packaged reports to prove they’re worth their fee.
- If you’re managing your investments yourself, you can generate your reports using portfolio-tracking software like StockMarketEye.
Good tracking software will allow you to build portfolio reports that perfectly match your goals and preferences.
Best Practices When Building and Using Portfolio Reports
Once your reports get generated, you can think about how to use them. Here are some best practices you can follow to make sure you’re getting the most out of your reports:
Regularly Review and Update Reports
Your portfolio reports won’t do you much good unless you regularly review and update the data.
For long-term investors, quarterly reviews are ideal. It’s frequent enough to notice big problems and infrequent enough to avoid adding another stressful chore to your life.
When you review your reports, make sure your strategy is working and that your performance at least matches benchmarks.
If you have some investments that are dead-weight, sell them and double down on your top performers. Yearly rebalancing is optimal for long-term investors.
The review process is also an opportunity to make sure your data inputs are accurate and up-to-date. Check your transaction reports to ensure all deposits and withdrawals are there and that all your data sources are updated.
Compare Reports With Industry Standards
The simplest way to know you’re building good reports is to compare your results with examples made by the pros.
Banks and other financial institutions have armies of analysts working on their reports, so find and study good examples, copy the parts that are most useful to you, then discard the rest.
Go through this process a few times, and you’ll have a portfolio report set that perfectly suits your personal preferences.
Leverage Technology and Automation
Technological developments make portfolio reports and tracking more accessible than ever before. What would have taken days to compile now can be achieved in minutes.
You probably use a consolidated portfolio tracker if you manage your investments independently. If so, use as much automation as possible to save valuable time and make the process easier.
Examples of effective automation include automatic portfolio updates with data from brokers and other accounts.
That is one less step required to guarantee your reports get updated. While that might not seem like much, it’s a huge time saver for more complex portfolios – especially over the long term.
Seek Professional Advice When Needed
While we think anyone can develop the skills and knowledge to self-manage a portfolio, investing can be a lonely road. Sometimes you will find conflicting advice, so it helps to talk to experts to see if you’re on the right track.
This doesn’t mean you need to give up autonomy over your investing, but it never hurts to get a second opinion from a pro.
Portfolio reports make consultation easy as you can present a concise, detailed, and accurate summary of everything you need to quickly get an advisor up to speed about your investment situation. No need to waste your time – or your advisor’s – compiling data.
Ensure Data Accuracy
It’s essential to ensure your data is always accurate. Portfolio reports are worse than useless if they use old or inaccurate data.
Before making any decision based on your reports, confirm that your data is accurate and up-to-date.
Maintain Data Security
The tradeoff of living your financial life online is that you become a target for cyber-criminals who want to take advantage of any vulnerability. It’s crucial to take data security seriously.
While most banks and brokers will eventually sort out criminal activity, do you really want to deal with that? Better to avoid the problem altogether by being vigilant about your data and access.
Make sure you change your passwords when needed, and don’t take risks that could expose your personal data to internet villains. If something online seems too good to be true, it is. Protect your information and be a hard target.
We Make It Easy to Start Building Your Own Reports
Are you ready to start building your own portfolio reports? With some best practices in mind, you can filter information to help you reach your investment goals.
If you want to get started on your reports, check out StockMarketEye, our complete portfolio tracking solution. Our software includes a full set of portfolio reports and charting tools that give you the accurate data you need. We offer a no-risk, 14-day free trial, so try it today!
