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Re: Portfolio Overlay

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Posted by Mark on February 06, 2002 at 23:14:21:

In Reply to: Portfolio Overlay posted by Bob Organ on February 06, 2002 at 21:05:12:

: When using the portfolio overlay graph, if investments are added or sold during the graphing period, are they only included in the portfolio results for the time period that the investment was non-zero in the portfolio?

: For example

: Day 0
: Portfolio contains:
: Investment A $100
: Invsetment B $400

: Then on day 5
: Investment C $100 is added

: On day 10
: Investment A $120 (has increased in value) is sold.

: For the period of day 1-5, if prices are entered for Investment C - are they included in the hypothetical performanc of $10K (or not included since the "value" is 0 for those days)?

: Similarly, for days 6-10, is Investment A included (if prices are entered) or is it not included because the value would be 0 for those days?

: Thanks much,

: Bob

Hi Bob,
It kind of sounds like you are using an old version of FM? In the
new version there are 2 types of overlays you can do with your portfolio
and selected investments: Value or Price+Dist.

From the online help:
This graph compares the performance of your portfolio and any selected overlaid investments. The purpose is to compare how well you would have done if you had invested your money in any given investment versus investing it as you did in your portfolio. The performance is compared starting from the beginning graph date. There are two different types of this graph: Value or Price + Dist..


This graph plots the actual portfolio value and an equivalent hypothetical value for each selected investment. The hypothetical investment value starts off at the same value as your portfolio on the beginning graph date. This hypothetical investment value is displayed as if you had invested all your money in just this investment. When you take money out of (or put money into) the portfolio, the same amount is also taken out of (or put into) the investment.

Price + Dist.:

This graph plots the hypothetical portfolio price plus distributions and the normalized price plus distributions for your selected overlaid investments. The portfolio and all overlaid investments start off at an initial price of $100 (user-adjustable
). The change in portfolio price is determined by a weighted average of the performance of each investment in the portfolio. The weighting is controlled by each investment's value, as compared to the total portfolio value. The weighting is readjusted on a daily basis.

Example: You have 2 investments in your portfolio, investments A and B. On day 0 investment A has a value of $100 at a share price of $10/share. On day 0 investment B has a value of $300 at a share price of $20/share. Therefore, on day 0 the portfolio has a value of $400, comprised 25% of A, and 75% of B. All investments and the portfolio have the same starting price of $100 on day 0. Assume, that on day 1, investment A increased 10% to a value of $110 and a share price of $11/share, and investment B increased 5% to a value of $315 and a share price of $21/share. The portfolio price would increase by 6.25%:

6.25% = 25% * 10% + 75% * 5%

This would increase the hypothetical portfolio price for day 1 to $106.25. The weightings would then be readjusted to (110/425)*100 % and (315/425)*100 % for the calculations of hypothetical portfolio price for day 2.

To change the range of dates being graphed see the menu/toolbar command View/Dates, use the mouse shortcut, or see the keyboard shortcuts. To change the initial price used for the Price + Dist. style of this graph see the menu command Graphs/Options/Display....

Mark Beiley

Fund Manager, portfolio management software for Windows 95/98/ME/NT/00/XP

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