Why your portfolio tracker and your broker show different returns

How it works

A broker statement and a portfolio tracker look at the same account from opposite ends. The broker holds the securities and the cash, so its figures come from the custody and tax record: what settled, what was paid, which lots the tax report says were sold. A tracker holds nothing. It rebuilds the account from the transactions it was given — by broker connection, CSV, PDF parsing or typing — and then values that reconstruction with its own prices and its own exchange rates.

So a gap between the two percentages has two possible sources, and they need separating before anything else.

The inputs differ. A transaction the import missed, a dividend recorded on a different day, a fee booked as a separate line on one side and inside the price on the other, a foreign amount converted at a different rate. These show up as a different ending value, and they are findable: the value is holdings times price times exchange rate, plus cash, and every term can be compared line by line.

The arithmetic differs. Identical transactions, identical closing value, and still two percentages — because one side computed a time-weighted return and the other a money-weighted one, or measured over a different start date, or split realised and unrealised gains by a different lot method. None of those is an error. They are answers to different questions, and the page rarely says which question it answered.

The sections below take the five places the two most often part company, in the order worth checking them: the return formula, the dividend date, the exchange rate, fees, and the lots a sale used.

Two formulas, both correct

The first thing to establish is which of the two standard figures each side printed. A time-weighted return cancels out deposits and withdrawals; a money-weighted one is moved by them. That entry has the definitions and the arithmetic. For reconciling, the consequence is enough: on an account funded once and never touched the two agree, and on one funded every month they do not, by more the larger the deposits are against the balance and the rougher the market was around them.

The trackers in this catalogue take different positions, which is why switching tools can move the headline without a single transaction changing. Sharesight reports money-weighted only; Portseido and Wealthfolio report both; getquin shows a simple relative return on its free plan and puts TTWROR and IRR behind the paid tier. Portfolio Performance computes a true time-weighted rate of return and an internal rate of return over any reporting period, and Parqet shows three figures: a simple capital-weighted one, IRR and TTWROR.

A "simple" or capital-weighted return — gain divided by what you put in — is a third thing again. It is not wrong either, but it is not comparable with a fund's published figure or with an annualised IRR, and it is the number a dashboard tends to show first.

The start date is part of the formula. "Since inception" on the broker means the day the account opened there; on a tracker it means the first transaction imported. Holdings transferred in from another broker arrive in the tracker with whatever cost and date you gave them. Whether you record that transfer as the original purchases, on their original dates, or as one inflow of securities at the day's value decides where the tracker's history begins and what it treats as money you added — and the receiving broker, which saw only the transfer, starts from the second.

When a dividend counts

A dividend has several dates, and the two sides of the comparison may use different ones. The one that decides who is entitled is the ex-dividend date. FINRA Rule 11140, as amended for the T+1 settlement cycle with effect from 28 May 2024, sets it at the record date when the record date is a business day, for distributions under 25% of the security's value; for distributions of 25% or more it is the first business day after the payable date. The cash arrives on the payment date, which comes later.

From the ex-date the shares trade without the right to the dividend, so the price no longer carries it, and the cash is not yet in the account. A record that books income on the payment date shows a dip in value for those weeks and a jump when the cash lands; a record that books it on the ex-date shows neither. Delta adds dividends automatically on their ex-dividend dates, switchable per portfolio. A broker's cash ledger records the payment when it is paid. Over a year the totals meet; over a month, or at a quarter end that falls between the two dates, they need not.

Three further differences sit on top:

• Reinvestment. A reinvested dividend is a new purchase at a new price and becomes a lot of its own. If the broker reinvested automatically and the import recorded only the cash, the tracker holds fewer shares than the broker and the gap compounds.
• Withholding tax. A foreign dividend arrives net of the source country's tax. A record of the gross amount plus a withholding line and a record of the net cash report different income from the same payment; dividend withholding covers why, and why a tracker's withholding percentage is an assumption rather than a copy of the statement.
• Income is not a deposit. GIPS, the CFA Institute performance standard, excludes dividend and interest payments from external cash flows, so they belong to the return rather than to the money you added. A dividend imported as a cash deposit is counted as your money, and every return figure built on it is understated.

Trade dates have the same shape at a smaller scale. GIPS requires trade-date accounting — the holding is recognised on the day of the purchase, not the day it settles — and treats recognition within three business days as meeting that requirement. A cash ledger that records money when it moves puts the same trade on its settlement date, and around a month end the two land it in different periods.

Which exchange rate, taken when

A holding priced in one currency and reported in another is multiplied by an exchange rate every time it is valued, and there is no single rate to multiply by. Two public reference rates for the same currency pair are set at different hours on different continents:

• The European Central Bank's euro reference rates come from a concertation between central banks that normally takes place around 14:10 CET, and are published around 16:00 CET on every working day except TARGET closing days. The ECB states they are for information purposes only and strongly discourages using them for transactions.
• The Federal Reserve's H.10 release reports noon buying rates in New York for cable transfers, certified by the Federal Reserve Bank of New York for customs purposes.

Neither is the rate your broker used. When a broker converts a dividend or a purchase, the statement carries the rate of that actual conversion, with any charge the broker takes for converting built into it or listed beside it. A tracker converting the same amount uses whichever daily rate its data source supplies, on whichever day it assigns to the transaction. The difference on one conversion is small; across years of dividends and a portfolio valued daily in a home currency, it accumulates into a visible gap.

The rate also has to be applied twice, and the two applications answer different questions. The rate on the purchase date sets the cost in your home currency; the rate today sets the value. Between them sits a currency gain or loss that exists only in the home-currency view. A broker that reports in the security's own currency shows none of it. Portseido tracks FX gain and loss per portfolio against a base currency, Parqet converts over 40 currencies into a home currency, and on a self-hosted Ghostfolio you supply the historical FX rates yourself, with "No exchange rate has been found" a documented FAQ entry.

For a tax figure the question is narrower still: the rate the tax authority accepts, on the date it names. That is a jurisdiction's rule, not a tracker setting, and a tracker that does not implement your jurisdiction is converting at a rate chosen for display.

Fees: in the cost or in the return

A commission can be recorded in two places, and both are legitimate. For US tax reporting, the IRS instructions for Form 1099-B tell brokers to include commissions and transfer taxes paid to buy a security in its initial basis. The fee disappears into the cost, raises it, and shows up later as a smaller gain. A tracker that records the same commission as its own transaction subtracts it from the return in the period it was paid. Over the life of a position the two meet; in any year between purchase and sale they do not.

GIPS takes the return side: all returns must be calculated after deducting the transaction costs incurred in the period — which it defines as brokerage commissions, exchange fees, taxes and bid-offer spreads — and it classes a custodial fee charged per transaction as a custody fee rather than a transaction cost. A professional report therefore separates the costs of trading from the cost of holding. An import rarely does. Account fees, platform fees and interest charged on a margin balance usually arrive in a tracker, if at all, as withdrawals of cash, and a withdrawal is an external cash flow: it lowers the balance and leaves the return untouched, so a fee recorded that way makes the account look better than it was.

Fees that never appear as a transaction are the same on both sides. A fund's ongoing charges are taken inside the fund and are already in the price both of them read.

Which shares you sold

Sell part of a position bought in several lots and somebody has to decide which lots went. That decision is the cost basis of the sale, and it moves one number while leaving another alone.

It moves the split between realised and unrealised gain. The US rules are in the glossary entry: under 26 CFR 1.1012-1, first in, first out unless you identified the lot to the broker at the sale, with average basis allowed for fund shares and dividend-reinvestment plans. What matters for reconciling is what the broker then reports. The 1099-B instructions tell it to treat the shares acquired first as sold where you gave no instruction, covered or not, and its figure is a reported basis only for covered securities — stock acquired for cash in an account after 2010, or after 2011 where the average basis method is available. For anything older, the cost the broker shows, if it shows one, is not a covered basis.

It does not move the total return. The account's value and its cash flows are the same whichever lots are deemed sold, so a time-weighted or money-weighted return for the whole portfolio is unchanged. If the headline percentage disagrees, the lot method is not the reason; if the realised gain disagrees, it probably is.

Trackers differ here more than anywhere else: Wealthfolio is FIFO only, Portfolio Performance offers FIFO or moving average, and Parqet lets each portfolio choose FIFO, average or LIFO. None of them sees the instruction you gave the broker on the day, so a specific-lot sale at the broker is a FIFO sale in the tracker unless you edit it.

One adjustment exists only on the broker's side. The 1099-B instructions require a broker to report a wash sale when both transactions happen in the same account on covered securities with the same CUSIP, and to add the disallowed loss to the basis of the shares bought. A tracker that does not implement wash sales carries the original cost. Sharesight, for one, reports US holdings on average cost with no wash-sale handling. The realised loss and the remaining basis will differ from the broker's by exactly the disallowed amount.

What you can do about it

Reconcile in order, and stop at the first step that disagrees. Each later step assumes the earlier ones match.

1. Pick one closed period and one date. A calendar month that ended on a business day, with no trade settling across its last day. Use the statement for that month, not the live dashboard.
2. Compare ending value before any percentage. Quantity per holding, then price, then exchange rate, then cash. A quantity gap is a missing transaction, usually a reinvested dividend, a corporate action or a transfer. A price gap is the closing-price source. A value gap in a foreign holding with matching quantity and price is the exchange rate — check which fixing, and which day.
3. List the external cash flows on both sides. Deposits, withdrawals, transfers in and out. A dividend imported as a deposit, or a fee imported as a withdrawal, turns up here.
4. Only then compare returns, and name them first. Find out whether each figure is time-weighted, money-weighted or simple, over what start date, and whether it is annualised. If the tracker offers both, set it to the one the broker prints. Portfolio Performance is free and computes both, which makes it a reasonable referee when two paid products disagree.
5. Check realised gains last, and against the tax document. Set the tracker's lot method to the broker's default, then correct any lot you identified specifically at the broker. For US covered securities, the 1099-B is the record the tax return uses; where it shows a wash-sale adjustment, the tracker's figure will differ by that amount until you enter it.

Three questions to put to a tracker's help centre before trusting its headline number: which return does the dashboard show by default, on which date does it book a dividend, and which exchange-rate source and time of day does it use. A product that cannot answer the third has not decided.

And one to put to yourself: which number are you actually trying to know? For comparing a holding with an index or a fund, the time-weighted figure is the comparable one. For knowing what your own money did, given when you put it in, it is the money-weighted one. For a tax return, it is neither — it is the realised gain on the broker's tax document, and a tracker is at best a check on it.