Client transfers of cash in/out or deposits/withdrawals

[cheapsk8]

Ok, I am getting my data downloaded correctly so far, except for the client deposits and withdrawals. When the client makes a deposit, FundManager Advisor identifies this as a Purchase of cash. When the client makes a withdrawal, FundManager identifies this as a Redemption of cash.

Also, interest income and dividends are listed as Purchases of cash, which seems fine from a performance measurement POV.

How does FM account for these client deposits and withdrawals when computing performance results?

[Mark]

Hi cheapsk8,

It is normal to record client contributions/withdrawals as purchases/redemptions of cash. Fund Manager knows these are external buys/sells, since there are no other corresponding transactions in other investments in the account. For example, if you buy $1000 worth of stock, you'll have a stock purchase for $1000, plus a cash redemption for $1000. Since a client withdrawal from cash doesn't have a matching stock purchase, this is marked as a portfolio external cash flow. It will show up as a contribution or withdrawal at the portfolio level when running a Portfolio Performance, Executive Summary, or Custom report with these fields.

Interest income on your cash should be recorded as a interest type of distribution in the cash. If the interest was put back into the cash account (which is most often the case) you would have this distribution marked as reinvested, or have a separate purchase of cash for the same amount on the same day.

Dividends that are not reinvested will be deposited into your default cash account, so you'll see a purchase into cash and a distributed distribution in the investment that earned the dividend.

Which performance results are you asking about for client deposits/withdrawals? For the ROI yields, they add another term to the yield equation. ROI yields are time and money weighted, so performance during times when more money is invested is weighed more heavily. For Gain/Loss amounts, the contributions/withdrawals add/subtract to/from your out of pocket cost used in these calculations.