This graph compares the performance of your portfolios and investments. The purpose is to compare how well you would have done if you had invested your money in any given investment versus investing it as you did in a portfolio. The performance is compared starting from the beginning graph date (inclusive). To choose which portfolios to overlay use the Overlaid Portfolios Dialog. If no portfolios are selected in the Overlaid Portfolios Dialog, then the active portfolio will be overlaid. To choose which investments to overlay use the Overlaid Investments Dialog. There are two different types of this graph: Value or Price + Distributions.
Value:
This graph plots the actual portfolio value and an equivalent hypothetical value for each selected investment. The hypothetical investment value starts off at the same value as your portfolio on the beginning graph date. This hypothetical investment value is displayed as if you had invested all your money in just this investment. When you take money out of (or put money into) the portfolio, the same amount is also taken out of (or put into) the investment. When overlaying investments and multiple portfolios, the "Reference Portfolio" will be used for the hypothetical investment value calculations. (See the Overlaid Portfolios Dialog)
The hypothetical investment value buy/sell transactions are done on a daily basis at the closing price.
Price + Distributions:
This graph plots the hypothetical portfolio price plus distributions and the normalized price plus distributions for your selected overlaid investments. The portfolio and all overlaid investments start off at an initial price of $100 (user-adjustable). Changes on the graph's starting date are included in the first plotted point.
There are 2 calculation methods available for calculating the hypothetical portfolio price: ROI Method or Weighted Average Method. The graph display option Allow Fast Portfolio "Price" Calculation for Price + Dist. Overlay Graph controls which method is used. Each method is described:
ROI Method:
The change in portfolio price is determined by calculating a daily ROI yield. For example, if your price on day 0 is $100, and on day 1 your daily ROI yield for that day is 5%, the hypothetical price on day 1 will be $105. This is the default calculation method, and is more precise in that it takes into account the effects of mid-day trades, where the transaction prices may be different than the closing price. This method is slower to calculate though.
Weighted Average Method:
The change in portfolio price is determined by a weighted average of the performance of each investment in the portfolio. The weighting is controlled by each investment's value, as compared to the total portfolio value. The weighting is readjusted on a daily basis.
Example: You have 2 investments in your portfolio, investments A and B. On day 0 investment A has a value of $100 at a share price of $10/share. On day 0 investment B has a value of $300 at a share price of $20/share. Therefore, on day 0 the portfolio has a value of $400, comprised 25% of A, and 75% of B. All investments and the portfolio have the same starting price of $100 on day 0. Assume, that on day 1, investment A increased 10% to a value of $110 and a share price of $11/share, and investment B increased 5% to a value of $315 and a share price of $21/share. The portfolio price would increase by 6.25%:
6.25% = 25% * 10% + 75% * 5%
This would increase the hypothetical portfolio price for day 1 to $106.25. The weightings would then be readjusted to (110/425)*100 % and (315/425)*100 % for the calculations of hypothetical portfolio price for day 2.
The hypothetical portfolio price calculations for this method are done on a daily basis at the closing price each day. Relative differences between these two methods can occur when transactions are recorded at mid-day prices that differ from the closing price.
To change the initial price used for the Price + Distributions style of this graph see the Display Options Dialog.
Usage Tips:
You may also use the arrow and page up/down keys, as well as their equivalents on the toolbar, to scroll through which investments are overlaid. The investment which has its label on the left-most side of the legend (this is the "scrolling position" in the Overlaid Investments Dialog) will be scrolled to the next/prior displayed investment. This operation skips over other investments already selected for overlay. This feature is useful if you have some investments/indices that you would like to compare against your overlaid sub-portfolios.
When using this graph type with the Batch Printing feature, leave the Overlaid Portfolios Dialog cleared (no selected portfolios), so that the active portfolio will be used for each client.