Zerodha launches ‘Portfolio Performance Curve’ for traders: How to use on Console? Here's a step-by-step guide
- Zerodha's ‘Portfolio Performance Curve’ feature shows the actual performance of investments and trades (equity, mutual funds (MF), MTF, F&O, intraday, and commodities) after accounting for cash inflows and outflows.
Leading domestic brokerage Zerodha, on Friday, April 11, launched its all-new feature of ‘portfolio performance curve’ for traders to track their account performance on the platform's ‘Console’. Zerodha co-founder and chief executive officer (CEO) Nithin Kamath shared the launch announcement today via a post on the microblogging platform ‘X’ (formerly Twitter).
Apart from Zerodha, domestic brokerage Samco Securities introduced the feature with its ‘Personal Index’, launched in December 2022. According to Pratik Adani, co-founder and chief technical officer (CTO) of Samco Ventures Pvt Ltd, unlike end-of-day calculations, the brokerage's 'Personal Index' is real-time, enabling investors to track performance during market hours.
According to Zerodha, looking at the absolute P&L of the portfolio does not tell anything about the performance because it is just a snapshot in time. “To accurately assess the portfolio’s performance, one needs to analyse returns over time while excluding the cash inflows and outflows and compare this performance against a reasonable benchmark,” said the brokerage.
To help traders understand investment and trading performance, the brokerage launched the feature on ‘Console’. This separates the actual investment and trading performance while adjusting for cash inflows and outflows, giving an accurate picture of the trading account's performance.
“We at Zerodha just launched Portfolio Performance Curve on Console. This allows you to visualize your account performance, and you can compare it to a benchmark like Nifty 50. The performance curve is calculated in a similar way to the NAV of mutual funds,” said the Zerodha CEO in his post.
“The daily NAV is calculated using P&L of all trades across equity intraday and delivery, F&O, commodities, MTF, and MFs based on the cash in the account. The idea with benchmarking is to show you that if you are underperforming, maybe investing in an index fund would be better for you,” added Kamath.
What is the Portfolio Performance Curve?
The ‘Portfolio Performance Curve’ feature shows the actual performance of investments and trades (equity, mutual funds (MF), MTF, F&O, intraday, and commodities) after accounting for cash inflows and outflows.
Like MFs, which use an NAV curve to represent performance, the Portfolio Performance Curve applies the same principle to the entire trading account. Zerodha said it shows how investments and trades (F&O and intraday) perform over different periods. It lets traders compare their performance with the benchmark Nifty 50 index in a simpler and visual manner.
Also Read: NFO Alert: Samco Mutual Fund launches Samco Dynamic Asset Allocation Fund; All you need to know
Pratik Adani of Samco Securities states that the brokerage's ‘Personal Index’ allows traders to benchmark portfolios against multiple indices for large, mid, and small-cap stocks. One can choose preferred benchmarks—whether Nifty 50, Nifty Midcap 100, Nifty Smallcap 100, or others—to compare the portfolio’s performance during market hours. The flexibility helps tailor insights to investment style, whether focused on large, mid, or small caps.
How does the Performance Curve work?
The ‘Portfolio Performance Curve’ feature starts with a base net asset value (NAV) of ₹1,000. This is set from July 1, 2022, or when the trader's account reaches ₹1,000—whichever comes first. When one adds money to the account, new units are created based on the previous day’s NAV. Similarly, units are reduced from today’s NAV when one withdraws funds.
This ensures that the performance curve only includes the actual investment and trading returns, not cash inflows or outflows. Let us understand this with an example. In its example, Zerodha said, "Suppose an account starts with ₹10,000, and the trader decides to add ₹5,000 later."
This would appear as a 50 per cent increase on a typical account value curve. However, the jump does not represent actual profits—it results from adding more capital. Here's how the Performance Curve handles the situation:
The account value is ₹10,000, and the NAV is ₹1,000
Total units: 10 ( ₹10,000 ÷ ₹1,000)
When one adds ₹5,000, five new units are created ( ₹5,000 ÷ ₹1,000)
Now, the trader has 15 units in total (10 original units + five new units).
According to the brokerage, since the NAV remains at ₹1,000, the total value is ₹15,000 (15 units × ₹1,000 NAV), but the Performance Curve feature correctly shows that there has been no actual profit or loss.
How does the NAV change with market movements?
To understand how the curve reflects real portfolio performance, consider the following scenario:
Day 1: The NAV is ₹1,000 with 10 units, making the account value ₹10,000
Day 2: The portfolio gains ₹1,000, increasing the account value to ₹11,000 and the NAV to ₹1,100 (while the number of units remains at 10)
Day 3: Your portfolio loses ₹2,000, decreasing the account value to ₹9,000 and the NAV to ₹900 (the number of units still remains unchanged)
According to Zerodha, this ensures that the Performance Curve reflects only the portfolio’s actual performance and is unaffected by deposits, withdrawals, IPOs, or corporate actions such as bonuses or stock splits.
How does the Performance Curve benefit traders?
-One can view separate performance for equities, MTF, intraday, F&O and commodities
-One can view separate performance curves for only mutual funds (MF) investments
-One can get a combined view (equity, derivatives, and mutual funds) for a comprehensive picture of the portfolio’s performance
-The benchmark against Nifty 50 to compare the portfolio’s growth over time
To use the benchmarking feature, click Compare and select Nifty 50. This will show the percentage change in both the portfolio and the index. One can hover over the curve to view changes for a specific period. One can also zoom in on any timeframe, and the benchmark comparison data will automatically adjust to show the account's performance for just that period.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.
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