Performance calculation according to the BVI method

The BVI method for calculating performance was described by the BVI (Bundesverband Deutscher Investmentgesellschaften e. V.) itself as follows:

The so-called BVI method developed by the BVI Bundesverband Deutscher Investment-Gesellschaften e.V. offers a very simple and precise procedure for calculating time-weighted performance. The unit values of the funds at the beginning and end of the calculation period are compared, taking into account the reinvestment of distributed income. Distributions made during the calculation period are always considered reinvested at the unit value on the day of distribution, as is usually the case with an investment account. It is assumed that the distribution is reinvested, as otherwise the performance of distributing and accumulating funds cannot be compared.

When comparing management performance in this way, care must be taken to ensure that funds with roughly the same investment objects and a comparable investment strategy are compared over a longer period of time (e.g. 5 or 10 years).

The standard accepted by the European Investment Association (EIV) largely corresponds to the performance calculation used by BVI, with the difference that at European level the reinvestment of distributions is carried out without tax credits due to very different tax conditions.

The individual investment success

The front-end load actually paid plays a role in calculating an investor's individual investment performance. This varies depending on the fund and in some cases also significantly depending on the amount invested.

The performance calculated using the BVI method can be adjusted for issue costs by multiplying it by a factor corresponding to the respective issue premium or using the following formula:

Individual investment success also depends on the individual's personal income tax rate.

This shows that the option of taking the front-end load into account can be offered as an alternative. This is possible in the fund performance in the Infront Portfolio Manager via the parameter "Consider front-end load".

In addition, the performance can be normalized to one year using the "Annualization" parameter. This is done according to the proposal by Steiner/Bruns/Stöckl (Wertpapiermanagement, 10th edition) using the geometric return calculation method for periods of more than one year (What annual return would one have achieved if one had invested in this or that investment instrument n years ago?) and the principle of annualization for periods of less than one year (ensuring comparability over time).

Both methods can be combined in an annualization formula:

R:= to the power of (1+r, 365/t)-1
R: annualized return/performance
r: Return/performance
t: Period in days over which r was calculated
to the power of (x,y): Exponentiation 'x to the power of y'