As shown in the image on the right, an activity caused the Index value to jump a lot in a single day. Almost $200k. What would cause that gap reduction?
Here’s what happened:
The user sold a big chunk of NVDA (#1 position at the time) and diversified slightly by purchasing that dollar value quantity of TSLA (#2 at the time). NVDA in the past year has been a rocket, so naturally any equivalent $ value of Index would not have grown nearly as much as the NVDA. So in that case the gap between the portfolio and the Index was at it’s zenith.
By selling NVDA, the Index sum is reduced by the sum of the original purchase amount of NVDA and the amount that Index had grown in the period. By purchasing the TSLA, the same $ amount of Index (the same as proceeds of NVDA, which is the same $ amount as purchase of TSLA) is roughly $200k more than the previous value of Index before the sale of NVDA occurred.
Although it may sound a little complicated, it means that this user is most certainly beating the Index, and is still $800k ahead of the Index.
The Index value, for tracking purposes, is reset to the amount of the stock’s purchase total at the time of the purchase. It does seem to grow, but at a much lower rate than the stocks in ones portfolio that are following the Brockmann Method and diligently applying the actions of the BeyondETFs Pro app.
Learn more about the Gap.