Measuring performance
Mark to market
Valuing a holding at the price it could be sold for today, rather than what was paid for it.
How it works
Marking to market keeps a portfolio’s stated value honest and current. It is what makes unrealised gains and losses visible day by day.
Where no market price exists, valuations are "marked to model" — estimated. Those estimates are far less reliable, and they tend to be optimistic.
Where it misleads people
Assets marked to model appear less volatile than they are. Smooth valuations in private assets are often a reporting artefact rather than genuine stability.
Related terms
- Unrealised profit and lossThe gain or loss on holdings you still own, based on today’s price.
- Net asset valueThe value of everything a fund owns, minus what it owes, divided by the number of units.
- LiquidityHow quickly you can turn something into cash at a fair price, without moving the price against yourself.
- VolatilityHow much an investment’s returns bounce around their average — the standard measure of risk.
Mentioned in
More in Measuring performance
- Money-weighted return
- Look-ahead bias
- Nominal return
- Information ratio
- Out-of-sample testing
- Equity risk premium
- Overfitting
- Contribution to return
All 29 Measuring performance terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.