Removing cash accounts from portfolio performamnce

[iwik]

While I have a specific requirement, there are some more general questions around the capabilities of filters in generating reports.

The specific requirement is to remove all cash like investments from a portfolio performance report. The cash (to me) is noise, as as I can move cash across portfolios, the transfers in and out can swamp true investment gains and losses.

I had assumed that filters could do this for me, but I have struggled to do anything better than to have all non-cash investments in the same asset class, and then filter by that asset class. However, this removes a lot of context around individual investments, as they are then classified only by cash or non-cash, with no ability to use asset classes as they were intended.

Am I missing something obvious here? If not, could I suggest a couple of possible enhancements that would allow a lot more flexibility is in using filters;

The first is to allow full booleans in selecting filters - for instance '((this asset class) OR (that asset class)) AND (another asset class)'. A simple 'NOT (cash asset class)' would solve my immediate problem, but this is still pretty limited.

An alternative would be to allow investments to belong in multiple asset classes. This would allow the user to build an asset class hierarchy (an investment could be both non-cash and small cap stock for instance) which would still allow filters to work as currently, but move the flexibility into the asset class allocation.

But maybe it already allows me to do exactly what I want, but I haven't figured out how!

Regards - Andrew

[Mark]

Hi Andrew,

You can't do this today with the current "filter" feature. One possibility is you could organize your investments into greater sub-portfolios, such that you have all your non-cash investments in their own sub-portfolio that you could report on. Something like this:

Code: Select all

- Account sub-portfolio
  - <cash investment>
  - Non-Cash sub-portfolio
    - <non-cash investments>

I do like the idea of being able to make the filters more powerful as you've described. I'm sure that would come in handy.

You can include an investment in multiple asset types or investment goals, but only as percentages that add up to 100% total for all categories.

[iwik]

Thanks again Mark. Hadn't considered the option of putting all the cash accounts in the own sub-portfolio out of the way, and also wasn't aware that the 'Show All' option on the portfolio properties still allowed these to be assigned as defaults to a sub-portfolio they weren't part of. Between these, I think I can do what I want.

Andrew

[lite1]

This is old topic, but Mark I like your approach here (below). Which of these levels has a default cash account? If one has an existing sub-portfolio with both investments AND a default cash investment, how would one go about shifting to the structure you describe?

Hi Andrew,

You can't do this today with the current "filter" feature. One possibility is you could organize your investments into greater sub-portfolios, such that you have all your non-cash investments in their own sub-portfolio that you could report on. Something like this:

Code: Select all

- Account sub-portfolio
  - <cash investment>
  - Non-Cash sub-portfolio
    - <non-cash investments>

I do like the idea of being able to make the filters more powerful as you've described. I'm sure that would come in handy.

You can include an investment in multiple asset types or investment goals, but only as percentages that add up to 100% total for all categories.

[Mark]

Hi lite1,

You would assign the default cash account at the "Non-Cash sub-portfolio" level or "Account sub-portfolio" or both...

If you want to use this structure, just create a new sub-portfolio under your existing one for the "Non-Cash sub-portfolio", and then drag/drop all the investments from the current sub into this new one, and then assign the default cash account. You do all this management of sub-portfolios in the Portfolio Editor window.

[lite1]

Hi lite1,

You would assign the default cash account at the "Non-Cash sub-portfolio" level or "Account sub-portfolio" or both...

Ok, but what impact does the above have - default cash in two places versus only one? Assume that I sweep credits/debits through the identical money market fund. And that I want to be able to see performance results that give me these options:
a) Entire portfolio - use the topmost level in your structure
b) Just the non-cash investments - use that sub-portfolio
It'd seem that I'd only have default cash inv for the cash sub-portfolio.

========
If I do NOT have a default cash investment within the Non-cash investment sub portfolio, does that then mean that my performance results will only reflect the investment positions, but will not take into consideration money flows (namely my timing decisions)?

Thanks for your patience in going over some of these core concepts so that when one sees a performance number you know what it means, and how to compare to some other performance number - all in the plan to make better investment decisions.

[Mark]

You can have the assignment in 2 subs, but you only have 1 cash investment. If you assign this 1 investment as your default cash account for both subs, any transaction in either of these 2 subs will use that investment as the default cash account. If you record a buy/sell in any investment, only 1 corresponding cash account entry will be recorded. To assign the cash investment to the "non-cash" sub in this example you would have to use the "Show All" button since the cash investment isn't located in that sub.

The cash investment is included if you report at the higher level sub, but the cash investment isn't included when you report at the lower level sub where it is not included. The timing of your non-cash transactions will still be factored in, since those investments are in the non-cash sub.

[lite1]

Thanks Mark ... Will re-read your post a few times to make sure I understand. Can one make a copy of an entire sub-portfolio so it is an independent duplicate that at the moment of creation is the same as the original? What I am thinking is that I'd do this and do some experimenting on my own with some FM features and things mentioned in the forum and see how it works. I'd still have my original intact and could compare my copy to that to understand the impact.

My current structure is simple:
One top level master portfolio
8 sub-portfolios that do NOT have any level below it

If you can not make a copy, I imagine that I could then make a backup (File | Backup); do my experimenting and then do File | Restore; however that would make me slightly nervous.

[Mark]

Hi lite1,

You can't make a copy from within FM, but you could either make a copy of your whole data folder or just create a backup. Creating a backup is safe/easy. Just use "File / Backup..." and assign it a filename. If you ever want to go back to that point, use "File / Restore..." and pick that same file.

[CeSinge]

Lite1, iwik,

I had the same problem with cash as you guys do, and essentially solved it in the same way as what Mark describes. So you may find some additional reading in this thread.

However, the approach has also some drawbacks and advantages to consider:

• Your cash is now really separate from your investment account folders, so no hope to make a report on investment with cash;
• Easy to see your cash, nicely all together in a folder.

While doing this, consider splitting everything into a few more folders:

• separate folders for investments you want to follow, but do not own; for currencies (USDEUR=X and such); for precious metals (like XAUUSD:CUR for Gold); and for Indices. This way, they are also out of the way of your reporting.
• Also, if you do have investments in different currencies with the same bank, it is a good idea (I think) to create subfolders per currency (within each bank). So you have BankA, with a folder USD and another folder EUR. And possibly a BankB with the same structure. All these folders have their cash accounts in the unique Cash folder.

The benefit is that your $ cash is accounted separately from your Euros (or whatever), as your bank does. This makes it much easier to match what you have with your bank statements. (FM can handle mixes of currency in the same portfolio, but your bank doesn't do it that way...)

FM allows it all, but sometimes its tricky to make it work the way you want... I hope this helps.