Re: Comparing a Subportfolio to an Index in Reports

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Posted by Mark on August 14, 2006 at 10:25:09:

In Reply to: Re: Comparing a Subportfolio to an Index in Reports posted by Steve on August 13, 2006 at 22:30:58:

: Getting an Index in a subportfolio of a subportfolio is very straightforward. But how can the Index be displayed so it doesn't affect the total subportfolio balance result? For example, with the S&P 500 selling at circa 1200, purchasing 1 "share" shall affect the portfolio results.

: In the FAQs, it is advised that a purchase of $1 suffices...but I'm not following where to enter the $1 and where, if at all, to enter the Index total (say 1278 on the S&P 500,for example) on the day of purchase.

Hi Steve,

Some performance figures require that you make a purchase in the index. For example, the ROI yields will only report a yield on investments when you own some number of shares. An alternative in this example is to use the Fund Performance yields, which are share price based, and not affected by how much you own. Fund Performance yields will be the same as ROI yields if you had no transactions during the yield term, so it is valid to compare the FP yield of an index against the ROI yield of a client's investment or portfolio.

Here are a few ideas on how to handle reporting of an index for comparison purposes:

1) Create a new sub-portfolio at the same level as all your clients with all the indices in it that you want for comparison purposes. Print this report out separately. You can purchase 1 share or $1 total, whatever you prefer. Buying 1 share has the advantage that all the value fields will match the share price. Alternatively, don't buy any shares, but print this report using the share price based performance figures, such as FP yield instead of ROI yield.

2) Create another level of sub-portfolio hierarchy. Put the client's sub-portfolio and the index sub-portfolio in here at the same level. This way you can report on both in one report, without modifying the client's results. You would need to record the $1 or 1 share purchase in your indices. The drawback here is that the report will also provide a total of both the client's sub-portfolio and the index sub-portfolio, which is un-necessary information.

3) Put the index you want in the client's sub-portfolio. This would be at the same level as their account sub-portfolios, but not in any account sub-portfolio. Either do not record any purchases in the index, or if you do, just do $1 (or even $0.01). To record a $1 purchase, just record a purchase transaction for a "value" of $1. Tab over to the "Shares" field, and it will fill in with some small number of fractional shares. Leave the price field set to the closing price on that date.

Also note that you can have the same investment instantiated in multiple sub-portfolios, so you can have 1 index investments, and have it placed in all of your client's sub-portfolios. It isn't necessary to create one for each client.

Thanks,
Mark
--
Fund Manager - Portfolio Management Software

Replies:

• Re: Comparing a Subportfolio to an Index in Reports Steve 12:23:34 08/14/06 (1)
  • Re: Comparing a Subportfolio to an Index in Reports Mark 13:04:12 08/14/06 (0)