Tracking Execution Costs

[elstevio]

I'm using the trial 'Home' version at the moment to check I can get it to do something I want to do.
I want to record and report on execution costs which fall into several categories such as
Brokers Commission, Brokers Admin Charges, External Commissions, Govt Tax, Other.
FM buy and sell screens just have one entry for Commission. I want to know how much of the
profit/loss on a transaction goes in execution costs at the various cost category levels.

[Mark]

Hi elstevio,

For costs associated with a particular transaction, there is only the 1 "commission fee" amount. If you would like to track expenses associated with the overall investment (not a particular transaction in that investment), you can customize the distribution types to fit your needs. See "Options / Distribution Labels...". A negative distribution can be recorded to track fees/expenses associated with the investment. You can then report on these different distribution types (or expenses as you would use them).

[elstevio]

Thanks Mark,

I was looking at the way you suggest but wasn't sure I understood it so I posted.
Generally, I normally have the one investment with one transaction although it depends what you call a transaction. I would have a buy and a sell that each have execution costs. That's 2 transactions. Would your suggestion work if all the transactions, normally only the buy and sell, are contained in the one investment file? If I (my broker) bought more holdings in the same investment I suppose I could create a new investment file?

[Mark]

Hi elstevio,

Yes, if you only purchase 1 set of shares in an investment, then all the fees you record would be applied to just those shares. An investment in Fund Manager can have multiple transactions, such as multiple purchases on different dates for different amounts/shares.

If you did want to create a new investment for new shares of an existing investment, you can do this too.

[elstevio]

So, if I set up an Investment and then buy 10,000 units at $1 each, market cost before
expenses is $10,000. On the Buy page, I enter cost as $10,000 and Brokers Commission
of $100 making the total buy transaction £10,100 in the investment file.
I then open the new holding and enter negative distributions (expenses) of
Broker's Admin Charge $10, External Commission $25, Tax $20, Misc $5.
The total cost of my transaction is now $10,160.
Does this all up cost of $10,160 show up on valuation reports to compare with the market price valuation on the day so showing my gain or loss correctly?
Strangely enough, just today, my broker has added to a holding that already have

[Mark]

Hi elstevio,

Yes, this would show up in any of the "Out Of Pocket (OOP)" related figures. For example, create a Custom report with these fields:

Value (ending)
Gain (current)
Out of pocket basis (current)

You can read about the definition of OOP here:

http://www.fundmanagersoftware.com/help/def_oop.html

[ThomasK]

Mark,

I wish to record my share purchase amounts without recording the commission fees...and I've set the Investment Properties > Other to "No Fees".

To properly balance the cash, would I record the commissions out of my cash via a distribution of "Account Fee"? My brokerage statements show the commissions in a monthly and running totals.

Thanks,
Thomas

[Mark]

Hi Thomas,

Yes, you can do this. The account fees should have a negative value/shares, and be marked as "Reinvested", as you are redeeming cash to pay this fee.

[ThomasK]

Thanks,
So that I fully understand this, except for a "Withdrawn Distribution", a "Distribution" as from recording a movement of cash is using cash internally, yes?

Thus I understand using a negative value/shares as I'm recording an Account Fee...funds gone from cash internally.

But then does "Reinvested" needs to be checked because it is keeping the transaction internal?

What would happen if the Reinvested box was unchecked?

[Mark]

Hi ThomasK,

A distribution transaction can be either "distributed" or "reinvested". If it is distributed, the money was just paid out (or put in if negative). If it is reinvested, no external money flowed. Instead, the money was used to buy more shares (or shares were redeemed to pay for a negative distribution).

Since you are trying to record account fees that came out of cash, you want to record a negative value distribution, and mark it as reinvested, so that shares of cash are redeemed to pay for it. If you didn't mark reinvested, the cash balance would not change, and it would be like you had sent it a check to pay for the fees.

[ThomasK]

Okay, so looking at the Distribution Transaction window:

To record commissions/fees coming out of my Cash (account total goes down, performance gets impacted) I would:
- Set the Distribution Type to "Commissions"
- Check the Reinvested box
- Enter Shares as a negative amount

But what would I do for the dates...I've been recording my monthly total of commissions paid as a single amount and putting the Period Beginning and Period Ending Dates to show the 30 odd days of the period, so when the accountant looks at it they see that the commission amount was for that period.

So far so good??

[Mark]

Hi ThomasK,

Yes, that is correct. Also, keep the price at 1, and the value is the same negative number as the shares.

[ThomasK]

Thanks Mark,

FM automatically purchases cash to record dividends.

How/why would I be using the Distribution Type as "Dividend"?

Thanks,
Thomas

[Mark]

Hi Thomas,

When recording a dividend in a stock/fund you would use the "Dividend" distribution type. That dividend will be deposited into cash as a buy of cash.

Cash would normally not have a dividend transaction. You may have "Interest Income" distributions more commonly in cash.

[ThomasK]

Thanks, using the Dividend distribution type is what I thought.

But FM automatically enters dividends on new holdings as "purchase". 80% of the time the amounts are correct so I find myself only adjusting a few amounts here or there.

To be clear, if a new holding is entered, FM automatically "finds" that the dividend was declared and posts it...I really don't want to change dozens of items...

Do I / should I change these?? Is there a setting I overlooked to set FM to record dividends as "dividends" as you say in the previous post or just let sleeping dogs lie?

Thanks
ThomasK