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📉 Simple ROI (Return on Investment)

💡 What is it?

Simple ROI measures value generated relative to invested capital. In the current portfolio engine, the invested-capital denominator is the capital baseline from cumulative_external_cash_flow, not cash-only deposits.

🧮 Formula

\[ \mathrm{ROI}(t)= \frac{\mathrm{NAV}(t)-\mathrm{CapitalBaseline}(t)} {\mathrm{CapitalBaseline}(t)} \]

The same baseline drives headline total_gain_loss:

\[ \mathrm{TotalGainLoss}(t)=\mathrm{NAV}(t)-\mathrm{CapitalBaseline}(t) \]

CapitalBaseline includes ordinary external cash flows and priced in-kind ADJUSTMENT/TRANSFER capital. That prevents inherited or seeded portfolios from showing absurd ROI because an asset entered without a cash deposit.

🎯 When to use it

  • To read headline portfolio gain/loss against contributed economic capital.
  • To compare current NAV against the current capital baseline.
  • To sanity-check cash-flow-adjusted performance before looking at TWRR/MWRR.

📈 Position Net Annualized Return

Open holdings also expose a net CAGR:

\[ r_{\mathrm{net}}= \frac{\mathrm{MarketComponent}+\mathrm{Income}-\mathrm{FeesTaxes}} {\mathrm{CostBasis}} \]

Annualization uses:

\[ r_{\mathrm{ann}}=(1+r_{\mathrm{net}})^{365/d}-1 \]

The window starts at the first lot-affecting transaction: BUY, SELL, ADJUSTMENT, or TRANSFER. Values shorter than 30 days are suppressed. Full definitions are in Net Annualized Return.

⚠️ The Flaw: Cash Flow Dilution

Simple ROI is still sensitive to the amount and timing of capital added. If you add a large contribution after gains have already occurred, the ratio can fall even though market value did not. Use Period P&L, TWRR, and MWRR to separate absolute profit, strategy return, and money-weighted investor return.