Need a clarification with Contributions and Withdrawals

[Djobydjoba]

Quote from the help :
“Contributions are purchases that are external to the portfolio. An external purchase is any purchase that is not a reinvestment, not an "internal" purchase, and is not associated with a retained distribution. An "internal" purchase is one where there is a corresponding redemption in the portfolio's default cash account.”
And “Withdrawals are redemptions that are external to the portfolio.”

I have created a cash account in portfolio A. I put 10.000€ on it, so it’s a purchase of 10.000 shares for a price of 1€.
It’s an external purchase (a contribution) in FM terminology, isn’t it?

OK, now in the same Portfolio, I buy shares of a mutual fund : 100 shares for a unity price of 5 €. In the cash account, a redemption of 500 € is recorded. So here it’s an internal purchase, it’s not a contribution, are you agree?

So why in the Performance Report is there a 500€ contribution for the mutual fund, and a withdrawal of same amount for the cash account?

More specifically, if I sell shares of a fund A to buy shares of a fund B in the same portfolio, using a cash account for the internal transaction, I would expected not to see anything in contributions and withdrawals columns.

Thank you (and sorry for my bad English).

[Mark]

Hi Djobydjoba,

The definition of external/internal is with respect to each line item in the Portfolio Performance report. So, for the mutual fund purchase, the money into the fund is external to that fund, but not to the whole portfolio. You will see the contribution in the fund's line item, a withdrawal from the cash line, but for the total portfolio line, you will see zero contribution/withdrawal due to this transaction. The buy is internal from the portfolio's perspective, but the buy in the fund is external from that fund's perspective.

It can also be helpful to view a "Investment Transaction" report, and turn on the filter option to only view portfolio external transactions. This will show only portfolio external transactions, like your initial cash deposit.