in trouble to work with overlay portfolios share + dist

[gbfabiani]

I am trying to compare the % gain in a portfolio over time, and to compare with a second portfolio. If i plot one portfolio I get a % increase much higher that the one I have if I use the report performance portfolio . Probably the reason is that the graph assume I bought all the shares on the first day ?? ( while in fact i did overtime) .

Is it a possibility to have a graph with % gain on the actual stocks owned at the various dates, rather than the hypothetical one ?

If now I compare 2 porfolios, both are shown as all the shares were purchased on the first date, the question is the same, is it a chance to compare the performance between the 2 portfolios considering the actual dates the different investements were made ?

In general, if I grouped stocks in different portfolios It would be nice to see which one performed better on a comparison graph ; the comparison between virtual investments is a different type of info
thanks in advance
giovanni fabiani

Note : I set ROI everywhere, reports and graphs

[Mark]

Hi gbfabiani,

You can compare 2 portfolios by using the "Graphs / Overlaid Portfolios/Investments... / Price + Dist." graph type. Use "Graphs / Options / Overlaid Portfolios..." to select the multiple sub-portfolios you want to compare.

In this graph type, everything starts at a normalized price of 100 (user-adjustable). The changes from that point are reflective of all the transactions and price changes on a daily basis. For portfolios this is a hypothetical price + dist. where the weightings of all your holdings are re-adjusted on a daily basis, and the increase/decrease is a weighted average of all the price + dist. movements of all the investments in the sub-portfolio. Press "Help / Help on Graph..." for a more detailed explanation.

[gbfabiani]

Thanks ! i was reading the help a few times before submitting my post , but still I probably miss some key point. Let me try to explain myself with an example.

I have 2 portfolios, where i did record purchases of a few stocks, at different dates.
When I put both of them on the graph, and I choose to start wit price =100 on a date ( say the date I bought the first stock on the "older" portfolio) , I have the comparison and one portfolio last friday was at 104,65 and the second at 103,09.

If I compare this increments with the portfolio performance report, I have different data ( 4,45% and 2,23% respectively .

Why do I have differences between the 2 ways to measure the % gain over the same periodo of time ? I feel I miss a key reason there .... !

A second example, a portfolio I started on Dec 9 , with few stocks where I bought some Apple and some Microsoft, and other stocks which I bought the 9 of January. This portfolio grew a lot in this 3 months, but If I look at the portfolio performance I see 13,19% gain, while if I plot the overlay for this very same portfolio with the same date limits, I see a graph where price moves from 100 to 123,49

probably I can't figure out how the price index is calculated .......

[Mark]

Hi gbfabiani,

Are you comparing the change on this plotted graph with the "% Gain" field from the Portfolio Performance report? These 2 fields are slightly different, in that the "Price + Dist." graph is plotting a weighted average of the price + dist. of all the investments in the sub-portfolio. This is the NAV of your portfolio if you treat your portfolio like a mutual fund. It is impacted by the trades you make within the period. You can think of this as the performance you would get if you only ever invested at the closing market price on any given day (like with a mutual fund), and you never added or removed any external money to/from the portfolio within the time period plotted.

This plot is representative of the performance of your portfolio over this period, but the earnings you actually realized can be greater/less if you did add/remove external money during this period. By adding/removing external money you are weighting your earned performance more/less depending on when you had more money invested in this portfolio.

Your earned performance can also vary if you were able to invest in this sub-portfolio at any price other than the daily closing price of the portfolio (think mutual fund).

The %Gain field is your earned performance (not time weighted), but is impacted if you added/removed external money or invested at a non-closing price. The plotted NAV + DIST graph is the earned performance of the intrinsic portfolio.

The plotted NAV + DIST of your portfolio is very similar to the Time-Weighted Returns (TWR), in that these factor out external contributions, and your actual returns may be different if you add/remove money during the period.

I find thinking of this graph as turning your portfolio into a mutual fund is a helpful concept. All the inner transactions/weightings of your portfolio affect the performance of the mutual fund's NAV. However, if you invest different amounts in this mutual fund (externally add/remove money from the portfolio) your earned returns will differ from the mutual fund over the same time period.

[gbfabiani]

Hi Mark,

sorry if I come back on the same subject, but step by step I am understanding a bit more ....

I realized I had the cash account in a different portfolio to the one I was trying to plot the graph. This way as I was investing a lot during the period I was analising, I had a very variable ( growing) portfolio value . I assume that If I was keeping the cash account within the same portfolio, the overall value over time would have change far far less, and probably my returns measured on the overlaid graph would have been much closer to the portfolio performance measure : is it correct ??

thanks
giovanni

[Mark]

Hi giovanni,

Yes, if your cash account is outside the sub-portfolio you're looking at you will see essentially a lot of external contributions/withdrawals every time you have a transaction.