Comparing YTD Performance and Reports Quarterly Participant Statements

Question: When I look at the monthly performance report, I see that most of the investment options I am using have very good year-to-date performance. At the same time, my latest personal quarterly participant statement might show negative investment earnings in the "Gain or Loss" column for some of the same investment options. How can that be?

Answer: Yes, when this happens, it can be somewhat confusing. The monthly performance report has columns on it for YTD (year-to-date); 12 Months; 3 Year; 5 Year; and 10 Year performance. If you look at a report reflecting performance through September 30th of a particular year, the YTD column would reflect the cumulative performance for the first nine months.

However, your quarterly participant statement "Gain or Loss" column only reflects the results for the quarter, not year-to-date. If your quarterly statement shows a negative number in the "Gain or Loss" column, then that particular investment option lost money during the same three months. Even though an investment option has a loss for a specific quarter (as shown on your participant statement), it could easily still have a positive overall return for year-to-date (as shown on the latest performance report). None of the performance data currently presented to you provides you with the actual results of the latest quarter. You could compute the performance for the quarter by comparing the YTD performance from the latest performance report to the YTD performance from the performance report of three months earlier.

Example, suppose a investment option made 20% in the first quarter and made another 10% in the second quarter and then lost 12% in the third quarter. The YTD column for the September 30th performance report would show a nice 18% positive return. At the same time, the third quarter participant statement would properly show a negative performance figure (a loss) because that investment option did, in fact, lose money during that specific quarter.

If you want to compare your personal participant statements to the YTD performance reports, you should look at all of the quarterly statements covering that period together. If an investment option shows positive returns for the YTD period ending on the same date as your latest quarterly participant statement, when you add your "Gain or Loss" figures together from all of the appropriate participant statements for that specific investment option, you will get an overall positive result as well.

You might also want to take a look at the Question about calculating your return on investment (ROI) on your retirement account.  That question explains why the performance stated for the investment options you are using for a year can be very different from the ROI you might calculate on your particular account.  A numeric example of how this can happen is available: ROI_EXAMPLE

If you have questions about the above, please call Paul Carlson of Plan Design Consultants, Inc. at (650) 341-3322.