Your portfolio says you are up KES 34,379, or 34%. It is a real number and it is correct. It is also not yet something you can compare with anything.

The missing word is "a year"

Every rate you would measure it against has a period built in. A money market fund quoting 12% means 12% a year. A Treasury bill quoting 7.65% means 7.65% a year. "Up 34%" means 34% since whenever you started, and that is a different kind of number.

Put the period back and the same 34% says two opposite things:

  • 34% over four years is 7.59% a year. That loses to a Treasury bill, for considerably more work and considerably more risk.
  • 34% over eight months is 54.65% a year. That is an exceptional run.

Same gain. Same portfolio. The only thing that changed was how long it took, and it changed the entire verdict.

Why it is not just dividing by the years

If you had put one lump in at the start and never touched it, it would be. Almost nobody does that. You bought some in March, more in August, took a dividend in November, sold a little in February.

Each of those amounts was invested for a different length of time, so each deserves different credit. Money that went in last month has not had a year to earn anything, and treating it as though it had makes a recent top-up look like a failure.

The figure that handles this is a money-weighted return — the annual rate which, applied to each payment for the time it was actually invested, arrives at what you have now. Every shilling is credited for its own time in the market and no longer.

The alternative, a time-weighted return, deliberately ignores when you paid in. It is the right measure for judging a fund manager, who does not choose when money arrives. It is the wrong measure for judging yourself, because when you bought is one of the decisions you made — someone who doubled their position a month before a rise did not have the same experience as someone who held throughout, and a time-weighted figure calls them equal.

Why the number is sometimes missing

Ipahco will decline to show a yearly figure rather than show a misleading one. Two cases:

Under thirty days. A 2% gain in ten days annualises to several hundred percent. That is arithmetically true, completely useless, and precisely the number that ends up in a screenshot. The page says too early to say.

Something cannot be valued. If a holding has no current price, the closing value of the series is unknown, and an annual return computed from a partial portfolio would be a confident answer to a question we cannot actually answer.

Reading it honestly

A money-weighted return is a measure of outcome, not of skill. A good one may be a good decision or a good year — the market was up and you were in it. A poor one in a falling market may be a perfectly sound portfolio.

Which is why the figure worth looking at is not the number on its own but the comparison: your annual return against what the same money would have done in a money market fund, a Treasury bill, or your sacco over the same period. That is the question the number can actually answer.

It is also why Funds and saccos shows what the provider's own published rate would have produced beside what you actually got. One figure is a result. Two figures are a finding.