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What you will learn
- Compare percentage changes despite different units and starting values.
- Separate a percentage-point return gap from a relative ending-value difference.
- Check dividends and the period before using an index as a benchmark.
Compare changes rather than cash with index points
The portfolio starts at SEK 10,000 and finishes at SEK 10,800. Over the same period, a fictional benchmark index moves from 250 to 275 points. The portfolio return is 800 / 10,000 = 8%. The index change is 25 / 250 = 10%. Both ending values apply to exactly the same period.
Comparing an SEK 800 gain with a 25-point increase would be meaningless because units and starting scales differ. Instead, set each starting level to 100. The portfolio then ends at 108 and the index at 110, showing the same two percentage changes on a common scale.
If the table does not fit, scroll it sideways.
| Measure | Portfolio | Index |
|---|---|---|
| Start | SEK 10,000 | 250 points |
| Finish | SEK 10,800 | 275 points |
| Change | +8% | +10% |
| Finish with start at 100 | 108 | 110 |
Two percentage points differ from two percent
The difference between the returns is 8 − 10 = −2 percentage points. The portfolio trails the index by two percentage points in our period. That wording directly identifies the measure being compared. Saying simply two percent behind can leave the denominator unclear.
If you instead ask how the portfolio’s relative ending value compares with the index after identical starting amounts, the measure is 108 / 110 − 1, approximately −1.82%. That answers a different question from the return gap. For a first comparison, clearly reporting +8%, +10% and −2 percentage points is enough.
Dividend treatment can reverse the conclusion
In a separate fictional example, a price index rises 8% and an index reinvesting dividends rises 10%. The portfolio’s result including dividends is 9%. Compared with the price index, the portfolio appears one percentage point ahead. Compared with the other measure, it is one percentage point behind.
Neither index is wrong; they describe different things. Check whether the index reflects only price movements or includes dividends, and how those dividends are treated. Also state which costs and taxes are included in the portfolio result and comparison. An index is a calculated measure, rather than a cost-free account you own.
Record the comparison rules before seeing the outcome
Write down the market or group the index follows, exact start and end dates, currency and return definition. A foreign index in another currency needs further handling before comparison with an account valued in kronor. New deposits must not be counted as portfolio gains either.
Choose a relevant comparison for the question you are practising and explain why it fits. Do not simply switch to an easier index after seeing the result. A single period does not prove lasting skill. Continue with Investiq’s portfolio guide for the practice account itself; this manual table does not confirm an automatic index-comparison feature in the app.
Try it yourself
A fictional portfolio moves from SEK 5,000 to SEK 5,250 with no cash flows. Over the same period, a comparable index moves from 400 to 408 points. What are the percentage changes and the gap in percentage points?
Show the solution and explanation
The portfolio rises 5% and the index 2%. The portfolio is 3 percentage points ahead.
250 / 5,000 × 100 = 5%. 8 / 400 × 100 = 2%. The gap is 5 − 2 = 3 percentage points under the question’s common comparison conditions.
Check your understanding
Can cash and index points be directly compared as returns?
No. First calculate each change relative to its own starting value.
Why check whether dividends are included in an index?
A price index and one including reinvested dividends measure different outcomes. The choice can change the conclusion.
Practise with virtual money
Try what you just learned in a practice portfolio with virtual money. You don't deposit any real money.
How the practice portfolio worksKeep learning and practising
More lessons on this topic
Trading, risk and benchmarks
Sources and examples
The sources support the factual explanations. Calculations and exercises were created for this lesson. Amounts and price changes are invented unless stated otherwise.
This material is educational and does not recommend securities to buy. A simulated result does not guarantee a future result.
