Investment statements: Simpler and more transparent


This method of calculation will give you the rate of return you've personally earned on your investments.

Marie-Christine Daignault | Desjardins Group

Starting in January 2017, you’ll be better equipped to monitor your investments and understand the related fees.

Canadian regulatory authorities have set new rules in an effort to provide you with clearer information about your investments. So as of December 31, 2016, two new reports will be included with your annual investment statements:

  • An investment performance report
  • A report on charges and other compensation

The two objectives of this reform are to enable Canadian investors to better understand their investments and related charges:

  • Details on the return on their investments
  • Transparency and clarification on fees and charges

Method of calculation for the rate of return as presented in the new report on the return on your investments

Following the changes, the method used to calculate the rate of return on your new investment performance report is based on the money-weighted rate of return. The new investment performance report will also be included with your quarterly investment statements. In your previous statements, the rate of return on your investments was calculated using the time-weighted return method.

As indicated in the table below, the rate of return on your investments now takes into account the deposits and withdrawals you’ve made as well as the dividends and interest payments you’ve received.

Fund performance differs from one investor to another, so this method of calculation will give you the rate of return you’ve personally earned on your investments and help you better understand fund fluctuations.

Differences between the two methods of calculation

Money-weighted rate of return

Time-weighted rate of return

WHERE

On the new investment performance report which will be included with the quarterly and annual investment statements.

On the websites of mutual fund companies

Monetary fluctuations (deposits - withdrawals - dividends and interest)

The degree of fluctuations and the dates on which they occur influence the rate of return.

No impact on your return.

What’s measured

The return on your investments and the impact of your decisions regarding monetary fluctuations.

The return on your investments

What’s evaluated

The return on your investments

The decision and the portfolio manager’s return.

With more details on your rate of return and greater clarity and transparency regarding investment fees, you now have all the information you need in hand to better understand your investments and how they fluctuate and perform.

This additional information will help you make more confident and informed decisions regarding your investments when you meet with your advisor.

As always, we recommend that you communicate regularly with your advisor. He/She will answer your questions and help you with your investment strategy. And, as needed, he/she will update your investor profile, risk tolerance, financial goals and investment horizon.

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