How portfolio scores work
What the A/B/C grade on each portfolio means, how it is calculated, and what it does not tell you.
What the score is
Every model portfolio shows a letter grade: A+, A, B+, B, C, or D. It is a single number that summarises how that portfolio has performed against the S&P 500 across three things: how much it returned, how far it fell in its worst period, and how much market risk it carries. SPY scores around B. That is the baseline.
A portfolio that has meaningfully beaten SPY with similar or smaller drawdowns will score A or A+. One that has roughly matched SPY will score B. One that has lagged or had a worse drawdown than SPY will score C or D.
Three factors, three weights
Three inputs feed the score, each with a fixed weight:
Did the portfolio beat the S&P 500? Beating it by more than 25% over the window earns the full points here. Lagging by more than 15% scores zero. Everything in between is prorated.
Did the portfolio fall less than the S&P 500 in its worst period? A significantly smaller drawdown earns the full 30%. A drawdown that is substantially worse than SPY's earns nothing.
Does the portfolio carry less market sensitivity than 1.0? A weighted beta below 1.0 earns the full 20%. Above 1.0 loses points. This rewards portfolios that achieve their returns without simply amplifying market exposure.
How the score blends over time
The score blends two time windows: the last 12 months (50%) and the full available history (50%). Blending stops a single lucky or unlucky year from dominating.
If a portfolio is under one year old, only the full-history window is used. The final grade is then dropped by one letter to flag the short track record. A short window is unlikely to have covered more than one or two of the five market environments (growth, inflation, recession, deflation, and choppy/sideways markets), so a high score early on carries less weight. A new portfolio that would otherwise score A will show B+ until it has at least one full year of data.
What the grades mean in practice
- A+
- Substantially beat SPY with a smaller drawdown. Strong returns and better downside protection across the measured window.
- A
- Meaningfully beat SPY with a similar or smaller drawdown. The portfolio has earned its complexity over the measured period.
- B+
- Beat SPY modestly, or matched it with a clearly better drawdown. A step above the index baseline.
- B
- Roughly matched SPY in both return and drawdown. This is where SPY itself would score.
- C
- Lagged SPY or had a noticeably worse drawdown. Worth understanding why before investing.
- D
- Both underperformed SPY and had a worse drawdown over the same period.
What the score does not tell you
The score is backward-looking and uses a single benchmark (SPY). A portfolio with a B might suit your goals better than an A-rated one if the A relies on one specific market environment to shine.
The measured window may only cover one or two of those five environments. A high score in a limited window is not the same as a strategy that holds up across all of them.
Use the score as a starting point, not a conclusion. Read the portfolio description and understand the strategy before making a decision based on the grade alone.
Educational content only; not investment advice, not a recommendation to buy or sell any security. Past performance does not guarantee future results. Leveraged and alternative funds involve substantial risk.