The RI Indicator is a quantitative model developed by Return Insights that classifies stocks based on defined statistical criteria. Using this classification, the rules‑based RI Index is constructed, and its composition is updated monthly in accordance with the model logic.
The chart below illustrates the development of a monthly illustrative investment model with contributions of 500 euros and annual increases of 2.00% over the past ten years, before taxes. The capital development is calculated according to the RI Index simulation. For context, the model‑based capital developments of the S&P 500 and the MSCI World Index are also shown.
The model assumes monthly updates to the index composition based on the RI Indicator. Securities that no longer meet the model’s selection criteria are removed from the index, and the index weights are reassigned in accordance with the rules‑based methodology. The simulation incorporates model‑based assumptions regarding the rebalancing process and the redistribution of capital within the index.
The table below presents model‑based metrics derived from a historical simulation using publicly available market data. The values are provided solely to illustrate the model logic and do not allow any conclusions to be drawn about future developments.
TWR (Time‑Weighted Return): Measures the pure investment performance of the portfolio, independent of the timing and size of cash flows. The TWR is suitable for comparing different investment strategies because it evaluates only the quality of the portfolio allocation — not the investor’s contribution behavior. It answers the question: How strong was the investment strategy itself?
IRR (Internal Rate of Return): The IRR is the discount rate at which the net present value of all cash inflows and outflows equals zero. It incorporates the timing and size of every cash flow, thereby reflecting the investor’s actual realized return — including transaction costs. It answers the question: What return did the investor personally achieve?
For further information about the RI Index methodology, please contact Return Insights by email.
Disclaimer: This presentation was prepared by Return Insights for informational and analytical purposes only. It is intended solely to present statistical analyses based on historical market data. All metrics, charts, and calculations are based on past price developments and serve to describe observed market behavior. Future returns and risk profiles may differ from historical observations due to changing market conditions. Despite the utmost care in data collection and processing, no guarantee can be made regarding the accuracy, completeness, or timeliness of the information presented. All calculations have been performed to the best of my knowledge. Data sources are Yahoo Finance and FRED (Federal Reserve Economic Data). The information contained in this presentation does not constitute financial analysis, investment advice, investment recommendations, or a solicitation to buy or sell financial instruments.