When an Investor joins a Portfolio Management Solution, an account known as an investment is opened. This account tracks and copies the Portfolio Manager’s or Strategy Provider’s trades within the fund or strategy.
The current value within the particular investment is known as the investment equity. In other words, it is the sum of the initially invested amount and trading results of all orders, excluding paid fees and other withdrawals.
How to calculate investment equity for funds:
Investment Equity = Investment amount + Investment Orders Profit or Loss - Fees paid - Sum of distributed profit
How to calculate investment equity for strategies:
Investment equity = Investment amount + Investment Orders Profit or Loss - Fees paid - Copy dividends
An Investor invested USD 1 000 in a strategy with a performance fee rate of 20%. In three months, the trading result of all their orders amounted to USD 200, and he paid 200 x 20% = USD 40 as a performance fee to his respective Strategy Provider.
The Investor was also given USD 30 as copy dividends. Therefore the investment equity is calculated by:
Investment equity for strategies = Investment amount + Investment Orders Profit - Fees paid - Copy dividends.
USD (1000 + 200 - 40 - 30) = USD 1 130
Learn more on how to monitor your investments’ performance.