Hello, I have two questions related to fund inflow and withdrawal.
For example,
- Jan 1, 2010: I had total $1,000,000 in my portfolio, of which $800,000 invested in stocks and $200,000 kept as cash.
- Jan 10, 2010: a client redeamed $100,000. I gave money from cash.
- Jan 20, 2010: a client deposited $150,000. I deposited the cash but did not invest.
- Jan 31, 2010: The $800,000 stock investment grew to $840,000. I had $250,000 ($200,000 - $100,000 + $150,000) in cash.
1) What is the best way to book deposit and withdrawal? Should I book $200,000 as "Purchase" and $500,000 as "Redemption"?
2) How does the return report adjust for the fund withdrawal and inflow? The return I had for one month was $40,000 or 4% of the fund I had at the begining of the month. However, the total amount of fund I had fluctuated during the month. I would like to know how to software calculates return adjusted for fund flow.
Thank you.
Aileen