Is my DEGIRO portfolio beating the S&P 500 or MSCI World?

A fair comparison against the S&P 500 or MSCI World has to account for when you deposited money, not just how much: in this article's worked example, the cashflow-weighted comparison shows outperformance of €659.69, more than three times the €200 the naive method (which credits every deposit with a full year of return) shows.

The pitfall of “the index did 9% this year”

The most common way to benchmark is: “the S&P 500 did X% this year, I did Y%, so I did better/worse.” That only holds if you deposited your entire stake on 1 January and never touched it again. As soon as you add money along the way — which most investors do — you’re not comparing two imprecise numbers, you’re comparing two numbers that simply don’t answer the same question. In practice we see this go wrong most often with investors who deposit monthly (DCA): that’s where the gap between the naive and the cashflow-weighted comparison is largest.

Why timing matters here too

Just as with calculating your own return (MWRR), benchmarking depends not just on how much you deposited, but also when. A fair comparison simulates: what if every deposit you made had been invested in the index at exactly the same moment?

Worked example: same year as before, now against an index

You deposited €10,000 on 1 January and €10,000 on 1 July, and ended up at €22,000 — an MWRR of roughly 13.5%. Suppose an index returned 9% that year.

The naive comparison (as if both deposits participated for the full year):

€10,000 × 1.09 + €10,000 × 1.09 = €21,800

Conclusion: you’re at €22,000, the index simulation at €21,800 — outperformance of €200.

The cashflow-weighted comparison (the second deposit only participated for half a year):

€10,000 × 1.09 + €10,000 × 1.09^0.5 ≈ €21,340.31

Conclusion: you’re at €22,000, the fair index simulation at €21,340.31 — outperformance of €659.69, more than three times what the naive method showed. Three times as much, in other words.

The difference doesn’t come from using different figures, but from the naive method wrongly crediting the second deposit with a full year of return it never actually earned. So why does €200 still feel like the right answer? Because the arithmetic is correct — it’s just the assumption behind it that isn’t.

Mind exactly which index you’re comparing against

Besides timing, there’s a second catch: which S&P 500 are you actually using? The price index (excluding dividends) structurally underperforms the total-return variant — where paid-out dividends are reinvested — by 1.5 to 2 percentage points a year. Compare your portfolio, which receives dividends and often reinvests them, against the wrong variant, and your outperformance will look bigger or smaller than it really is. ClearAnalyser benchmarks against the total-return variant of the S&P 500, MSCI World and Stoxx 600, so reinvested dividends count on both sides of the comparison.

Why this is more than an arithmetic nuance

Without these corrections, you can wrongly congratulate (or criticise) yourself for performance that’s really just a consequence of when you happened to deposit money and which index variant you compared against, not the choices you made. Beating or trailing an index, incidentally, still says nothing about whether that’s skill or just extra risk — you can read about that in how to read alpha, beta and R² from a regression.

How ClearAnalyser calculates this for you

ClearAnalyser benchmarks your portfolio live against the S&P 500, MSCI World and Stoxx 600, using the exact same deposit and withdrawal timing as your own portfolio — both across your entire history and per period. Which other tools offer a benchmark comparison is shown in the DEGIRO portfolio tracker comparison.

Sources: Time-Weighted Rate of Return — Investopedia · S&P Dow Jones Indices