gain % in the portfolio performance report

[gbfabiani]

Mark,

ig I am not wrong, in the typical performance report gain% = 100* gain/(Endvalue+Accint-gain)

At Investment level, no problem . At portfolio level, a doubt :
Now, if I add a significant investment to a portfolio this investment will increase the final value of the portfolio but for lack of time it will not add gain. The % gain calculated on the final value will decrease immediately , as the value on which is calculated is basically the final one.

At profolio level , %gain should not be calculated on the average value of this portfolio , for example calculating ( beginning+final)/2) ??

I just add to a portfolio 25% of its value in cash, and the very same day the %gain of the total period (9 months) decreased by 25% ........
thanks
giovanni

[Mark]

Hi giovanni,

The %Gain number is not time-weighted, it is only value weighted. So, large additions/withdrawals within the period of the report adjust the %Gain, no matter how long they were invested. Instead, a more reliable measure of performance is the ROI yields, which are time and money weighted. The Portfolio Performance report includes a Yield column, which is the ROI yield. For more on each of these, see the documentation:

%Gain:
http://fundmanagersoftware.com/help/def ... n_oop.html

ROI Yield:
http://fundmanagersoftware.com/help/yields_roi.html

[gbfabiani]

Mark, thanks !

However I do have many situation when the yield is not shown ( I mean in the portfolio performance , last column right) : sometime I see it on both investments and portfolio totals, sometime just on portfolio totals.

After a few trials, I realized that when the investment has been bought after the beginning date of the report, it shows the yield, while if the starting date is older, yields on youger investments are not calculated.

The question now become: if I have a porfolio whose investments start say January 2012, and print the report until April 5, I will have investments whose yield is shown ( they existed before) and others without it ( purchased later) . The final sub-portfolio totals, however, show the total yield : This total yield will consider the performance of all the investments or it will average just the yields of the investments showing an yield in the row ?

regards
giovanni

[Mark]

Hi giovanni,

There is a "Yield Interpolation Range..." option that prevents ROI yields from displaying on items where you didn't own it for the full yield term. You can turn this on/off. See the online help for a discussion of this option. As a quick example, say you owned an investment for only 1 month of a 6 month report period, and in that 1 month the investment went up 10%. If you allow the 6 month yield to report for items that weren't owned over the full yield term, you will get a nearly 60%, as ROI yields are time/money weighted. For the 5 months where you owned nothing, there is no weighting for that period. You can think of the ROI yield as a rate, it earned at a rate of 60% for a 6 month yield term, since in 1 month it went up 10%. This can be confusing if you aren't expecting this, so there is the Yield Interpolation Range option that by default won't report yields unless the item is owned over the full yield term.

In the case for the portfolio yield, it includes everything, even items that were not able to report their own yield because of this option.

[gbfabiani]

Mark,

I just tried to de-select the option "report ROI yield only when yield is owned for the entire yiIeld term" , and still I don't see yield.
Let me make an example : I bought Apple shares Dec 1st 2011 : a performance report Dec 1st to april 5 shows the yield , the same one starting November 30th doesn't. This second datre range doesn't show yield even when the Yield option is not ticked

sorry to be boring, ciao
giovanni

[Mark]

Hi giovanni,

The other reason a yield isn't reported is when you don't have sufficient pricing data recorded. So, for the yield starting November 30th, do you have a price recorded on November 29th? For an investment yield beginning Nov 30, you need a closing price recorded for Nov 29th, which is the starting point of Nov 30th. If you don't have a price recorded on that exact date, FM can interpolate one for you. Those are the other options in the Yield Interpolation dialog. See "Enforce Maximum Interpolation Range of X days".

Finally, there is the option "Allow Interpolation Prior to Earliest Recorded Data". For an ROI yield, this is the date of the first transaction. So, you would need to check this option if you want to report a yield starting Nov 30 when you didn't buy it until Dec 1.

All of these "Yield Interpolation Range" options can be kind of confusing, so if you press the "Help..." button in that dialog, they are all explained in more detail.

[gbfabiani]

Hi Mark, and thanks for your patience !

I have prices on the date(s) before the first purchase of the stock, and I also tried to select allow interpolation prior, no way , if the starting date is nov 30th or before, no Yield is shown, despite all the options about yield I was able to find !

[Mark]

Hi giovanni,

If you set the yield interpolation range options like this:

OFF: Enforce Maximum Interpolation Range
ON: Allow Interpolation Prior to First Recorded Data
OFF: Only Report ROI Yields When Item is Owned over Entire Yield Term

do you get a reported yield? If so, you can adjust them one at a time, to see which one is the reason you're not normally getting an ROI. If you don't get an ROI with the options set as shown above, please email me your investment file, and the report's date range.

[gbfabiani]

Dear Mark, you won ! with this combination of options it did work . I felt I tried them all, but eventually I missed the good one ......

Now that I have the yield everywhere , how do I have to understand it : take APPLE I bought Dec 1 at 382,00, and I measure performance till April five at 633,68. It gives me %gain 65,82% and yield 66,49.
If i extend data range , say July 1 to April 5, it returns 65,82% and 207,67% . This 207,67 is the theoretical gain I would have had if I purchased Apple on July 1 at July 1 price ?

and , finally, does the portfolio yield (always shown) reflect anyway the compound yields of the different investments by the time I owned them ?

many thanks
giovanni

[Mark]

Hi giovanni,

If i extend data range , say July 1 to April 5, it returns 65,82% and 207,67% . This 207,67 is the theoretical gain I would have had if I purchased Apple on July 1 at July 1 price ?

I am not sure I fully understand this question. What is the date range you are looking at? Is it July 1, 2011 (before your purchase) to April 5th, 2012? Since you only owned it for part of this time, the performance during the period you owned it is extrapolated to the full yield term. It is not reporting what if you had bought it on July 1. To understand this, see my example from an earlier post in this thread:

As a quick example, say you owned an investment for only 1 month of a 6 month report period, and in that 1 month the investment went up 10%. If you allow the 6 month yield to report for items that weren't owned over the full yield term, you will get a nearly 60%, as ROI yields are time/money weighted. For the 5 months where you owned nothing, there is no weighting for that period. You can think of the ROI yield as a rate, it earned at a rate of 60% for a 6 month yield term, since in 1 month it went up 10%.

and to answer your last question:

does the portfolio yield (always shown) reflect anyway the compound yields of the different investments by the time I owned them ?

Yes, the portfolio ROI yield includes all the items in the portfolio for the time you owned them. It is fully time and money weighted.