Hello,
I was wondering if someone could explain the discrepancy in results between buying and holding SPY as a strategy and the returns shown when SPY is the benchmark. Have a look at the backtest attached. The strategy returns 78% while the benchmark returns 93%, why the difference?
Regards,
Mark
Thanks Simon,
So conversely I assume a strategy that holds dividend paying stocks (like a value strategy that rebalances annually) will not have dividend payments properly accounted for in the backtest. Is that correct?
Backtests are correct; if you want to reinvest dividends the algo has to reinvest them. If not, the cash will just accumulate through the year.
Noted, passed along the request internally. EDIT: To clarify, the request for editing a forum post on mobile!
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