Performance

[lvs]

Hi Mark,
Could you please explain why am I getting this discrepancy when calculating returns?:

1-1-08 - 3-31-08
return = (2.86) -from the Perf report

4-1-08 -- 6-10-08
return = 1.48 -from the Perf report

If I link these numbers manually, I get (1.42). But according to the Perf report, the cumulative return for the entire period from 1-1-08 to 6-10-08 is (1.06).
FYI, my numbers match the ones on the Perf report for both periods above.

[Mark]

Hi lvs,

I'm guessing you weighted them evenly? If you are looking at ROI yields, they are value weighted, so if you owned a larger value during one of those periods, that would have an overall higher weighting.

If you'd like to verify any reported yields, you can insert the reported yield into the yield equation to verify that it equates. The equations are in the online documentation:

http://www.fundmanagersoftware.com/help/yields_roi.html

[lvs]

There was no cash additions or withdrawals. I calculate daily IRRs, which I link to get monthly, quarterly and annual returns (same as Axys). I don't think I need to do anything else.

[Mark]

Hi lvs,

Did you try verifying, by re-creating the yield equation, as shown in the online help? I can't say why your hand calculations aren't matching Fund Manager's numbers, but I can help verify Fund Manager's numbers report as documented.

Also, if you'd like, I can send you a special build, that will output the yield equation being used to a log file.

[lvs]

Mark,

The example calculation shown is not very clear to me.

1) The example mentions purchase. To calculate TWR purchase/sell information is not necessary. Any purchase uses up cash in the amount of the purchase; as a result, (+) purchase (-) cash cancel each other out. Any capital gains would be included in the EMV.
Do you mean cash contribution?

2) The example mentions cash distribution. If a distribution is made from the account, why is it added to the EV?
Is this income that was reinvested?

3) Why are you annualizing a 6-month return?

Thanks.

[Mark]

Hi lvs,

1) At the portfolio return calculation the - cash and + purchase terms do cancel out, but the example is showing the calculation of ROI for just the investment, not the whole portfolio. A purchase just means buying of some shares. If you had no transactions within the time period of the yield term the equation gets rather easy. In this case it is just:

End_value = Start_value (1 + i)^term

2) This example is just for that one investment, not the whole account. The investment paid a cash distribution, so it is a term in the equation.

3) It is just a choice made for this example. By default, a 6 month yield is not annualized. You can control this however under "Options / Preferences... / Yields".

Are the ROI yields in question for a specific investment, or for your whole portfolio? Do you have any transactions in the time period of the yield term?

[lvs]

Hi Mark,

Are the ROI yields in question for a specific investment, or for your whole portfolio?

-they are for a portfolio

Do you have any transactions in the time period of the yield term?

-yes, buys and sells

Also, I would like to correct myself. There was a cash contribution in the first quarter.

[Mark]

Hi lvs,

Since you are calculating ROI for the whole portfolio you need to include a term for all transactions within the portfolio. Granted, you can cancel some terms out, like if you buy a stock for $1000 and sell $1000 worth of cash on the same day, these will cancel. Also, a cash deposit in the first quarter will probably make your hand calculations difficult, since these are time/value weighted yields. You can create the equation, and check it against the numbers FM is reporting if you'd like.