Portfolio performance measures are a key factor in the investment decision. These tools provide the necessary information for investors to assess how effectively their money has been invested (or may be invested).

Portfolio evaluating refers to the evaluation of the performance of the investment portfolio. It is essentially the process of comparing the return earned on a portfolio with the return earned on one or more other portfolio or on a benchmark portfolio. 

Portfolio performance evaluation essentially comprises of two functions, performance measurement and performance evaluation. Performance measurement is an accounting function which measures the return earned on a portfolio during the holding period or investment period. Performance evaluation, on the other hand, address such issues as whether the performance was superior or inferior, whether the performance was due to skill or luck etc.

To evaluate the performance of a fund manager for a five-year period using annual intervals would require also examining the fund's annual returns minus the risk-free return for each year and relating it to the annual return on the market portfolio minus the same risk-free rate.

The five factors that affect portfolio value the most.Like-

1. Years of Compound Growth:

Compound or exponential growth is the most powerful investment principle. Start your investment program early! Consider this: If you start at age 25, a $300 monthly investment earning 8% will build a one million dollar portfolio value at age 65. But if you wait until age 45 to start, it will require a 1,700 monthly investment to reach a one million dollar portfolio value by age 65.

2. The Amount of Money Invested:

You can make up for time lost by investing more; but it’s much harder. Pay yourself first with an automatic investment plan. Invest and invest early in life.

3. Your Portfolio Rate of Return:

The miracle of compounded growth is affected by the length of time and the portfolio rate of return you achieve. It’s important to balance the desire for high returns with the risk of large losses.

It’s not always about achieving the highest rate of return. Develop a risk management plan that balances your desire for high rates of return with the possibility of losing your investment principal.

4. Your Asset Allocation:

How you divide your portfolio between different asset class categories is called asset allocation. Your asset allocation will determine over 90% of your portfolio returns.

The volatility of a portfolio can be reduced by combining assets with low correlation. This allows a portfolio manager willing to take a set amount of risk to invest in higher risk/higher reward investments than they would otherwise.

5. The Amount of Taxes You Pay:

Try to keep investment taxes low. Take advantage of tax favored retirement accounts and long term capital gains. The more money you keep, the more money you have to compound its growth, hopefully tax free or tax deferred.

These are the five most important factors to increase  portfolio value. All of these factors should be part of investment planning.