# Equity Portfolio Analysis Analyze an equity portfolio with position-level performance, concentration metrics, rebalancing rules, and sector tilts. No manual portfolio reporting required. - Canonical: https://finamodel.com/templates/equity-portfolio-model - Excel download: https://finamodel.com/templates/equity-portfolio.xlsx - Category: Capital Markets - Model type: Portfolio - Difficulty: Intermediate - Audiences: Investors & analysts, Fund managers, Portfolio managers, Advisors, Wealth managers, Institutional investors - Tags: portfolio, performance, attribution, rebalancing, risk ## Overview An equity portfolio analysis model tracks a 10-stock portfolio over a five-year period, computing total return accounting for dividends, rebalancing, and capital gains tax on realized trading events. The model begins with each position's entry price, dividend yield, expected annual return, and allocation percentage. Each year, the portfolio is rebalanced back to target allocations by selling positions that have outperformed (and realizing gains) and buying positions that have underperformed. Capital gains tax is applied only on the realized gain from the shares sold - not on paper gains that remain unrealized - capturing the tax efficiency of buy-and-hold versus active rebalancing. The workbook computes both the internal rate of return (IRR), which accounts for the timing of dividend inflows and outflows, and the annualized return (CAGR), which is simpler but ignores timing. Management fees (typically 0.5% annually) and transaction costs (10 basis points per dollar of shares traded) are deducted from returns. The Sharpe ratio (excess return per unit of volatility) allows comparison to the S&P 500 benchmark, showing whether the portfolio's active returns justify its risk and costs. This model is suitable for individual investors, wealth advisors, and asset owners evaluating active versus passive management, or assessing the tax efficiency of concentrated portfolios. ## What's included - Position-level holdings: symbol, shares, cost basis, current value, unrealized gain/loss - Portfolio weights and sector allocation breakdown - Performance attribution: price returns, dividends, contributions, and withdrawals - Concentration risk metrics and diversification analysis - Rebalancing simulation and tax-loss harvesting opportunities - Portfolio weights and sector allocation - Performance attribution: price returns, dividends, contributions, withdrawals - Historical return and volatility tracking ## Equity Portfolio Model: How the 5-Year Performance Template Works This equity portfolio model projects a 10-stock US equity portfolio over five years, comparing risk-adjusted returns to a benchmark. It accounts for dividends, annual rebalancing, management fees, and capital gains tax on realised events, offering a structured way to evaluate portfolio performance and cost drag. This article explains the template's documented specification. ### Operating Drivers Behind Portfolio Performance The model's performance hinges on two return sources: capital appreciation and dividend income. Each position's price grows annually at its expected return, while dividends per share increase at a specified growth rate. - Shares held determine both market value and dividend receipts, with share counts reset each year during rebalancing. Management fees, transaction costs, and capital gains tax act as drags. - The benchmark, a simple S&P 500 total-return proxy, provides a passive comparison. This structure isolates active decisions—allocation and rebalancing—from market movements. ### Annual Calculation Flow and Rebalancing Mechanics The model operates on annual steps from 2025 to 2029. Each year, prices are projected, then shares are adjusted to target allocations using the prior year's total portfolio market value. - This rebalancing triggers realised gains or losses on shares sold, with capital gains tax applied only to positive realisations. Transaction costs are computed on the absolute share change, ensuring no double-counting. - Dividends are calculated from post-rebalance shares. The process repeats for each position, and totals aggregate across the portfolio. This flow captures the compounding effects of rebalancing and cost drag. ### Output Metrics and Their Interpretation The model produces several key outputs: IRR, annualised return, benchmark return, excess return, and Sharpe ratio. IRR and annualised return both use the same terminal net market value, which deducts terminal capital gains tax and transaction costs. - Annualised return is a money-weighted CAGR, while IRR accounts for interim cash flows. Sharpe ratio uses the portfolio's volatility input. - These metrics help assess whether the active strategy, after costs and taxes, outperforms the benchmark on a risk-adjusted basis. All outputs are driven by the documented assumptions. ### Practical Applications and Limitations This template suits investors evaluating a concentrated equity portfolio's after-tax performance over a medium-term horizon. It highlights the impact of rebalancing frequency, cost structures, and tax drag. - The model is closed-end, with no additional contributions, and assumes long-only positions. It does not cover leverage, short selling, or intra-year trading. - Users can adjust assumptions like allocation, expected returns, and tax rates to reflect their own views. However, the public download is a values-only preview, not a live formula workbook, so it demonstrates the model's logic rather than enabling immediate recalculation. ## Built for active portfolio management Use this model to track drift, assess attribution, and run rebalancing trades without leaving a spreadsheet. ## Separates return sources clearly Performance attribution isolates price appreciation, dividend income, and portfolio flows so you know exactly what is driving returns. ## Handles concentration and risk limits Monitor sector and single-stock concentration against mandate limits to stay within portfolio guidelines at all times. ## Built for active portfolio management Use this model to track drift, assess attribution, and run rebalancing trades without leaving a spreadsheet. ## Separates return sources clearly Performance attribution isolates price appreciation, dividend income, and portfolio flows so you know exactly what is driving returns. ## Handles concentration and risk limits Monitor sector and single-stock concentration against mandate limits to stay within portfolio guidelines at all times. ## Features - **Real-time position tracking:** Update market prices and calculate mark-to-market portfolio value, unrealized gains, and allocation drift. - **Performance attribution by source:** Isolate returns from price appreciation, dividend income, and portfolio flows to assess strategy effectiveness. - **Rebalancing and tax optimization:** Model rebalancing trades to minimize tracking error and tax drag vs. target allocation. ## Use cases - **Quarterly performance reporting:** Generate client or board reports showing portfolio positions, returns, risk metrics, and outlook. - **Rebalancing and trading decisions:** Identify positions drifting beyond tolerance bands and evaluate rebalancing trades vs. taxes and costs. - **Risk management and concentration review:** Monitor sector and single-stock concentration to ensure portfolio aligns with mandate and risk limits. ## Frequently asked questions ### What is an equity portfolio model? A model that tracks equity holdings, calculates portfolio-level performance and risk metrics, and supports rebalancing and reporting decisions. ### What is allocation drift? Changes in position weights due to market movements that push the portfolio away from target allocation and increase unintended risk. ### How is performance attribution calculated? Attribution isolates returns from price changes, dividends, and portfolio flows using methods such as Brinson-Fachler allocator versus selector decomposition. ### When should I rebalance a portfolio? Rebalance quarterly or annually, or when allocations drift more than 5% from target, balancing diversification benefits against transaction costs and taxes. ### Who uses equity portfolio models? Portfolio managers, wealth advisors, institutional investors, and family offices use them for reporting, risk monitoring, and trading decisions. ## Related templates - [Alternatives Allocation Model](https://finamodel.com/templates/alternatives-allocation-model) - [Multi-Asset Portfolio Allocation](https://finamodel.com/templates/multi-asset-allocation-model) - [Hedge Fund Operating Model](https://finamodel.com/templates/hedge-fund-model)