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Inaccurate and Variable YTD ROI

Clint

I've noticed the same problem with YTD ROI % & Returns in "portfolio view" as originally posed by "fp". I'm using latest ver Q 2019 Deluxe. I have several positions bought in Dec '18 that now, Jan '19, showing correct values for cost, gain/loss, dividends, etc in the "details view" for the position(s); but, the YTD ROI values are outrageously & incoherently wrong. However, when looking at the column set up to display "ROI Return or %" values for these same stocks (which are calulated as per any date set in the "portfolio preferences") the ROI values are correct! The ROI calculations for other positions held 1, 2, 3 years all appear close, if not absolutely correct.

Note: This conversation was created from a reply on: Inaccurate and variable YTD ROI.

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Jim_Harman

Check the 12/31 share prices for the problem securities in the Price History.

Set up an Investment Performance report for each of the problem securities with the date range set to YTD and look for wrong numbers in the details. (The percentages in this report will not be meaningful because they are annualized)

Jim_Harman

I looked recently at the Return YTD and ROI (%) YTD numbers with QWin 2019 R17.6 .

It appears that the Return number for a holding is (current market value) + (cash distributions) + (sales proceeds) - (purchases) - (initial market value).

For ROI (%) the formula is (Return) / ((initial market value) + (investments)).

Alternatively, you can look at the Investment Performance report for the same period and

Return = Total Returns - Total investments
ROI (%) = (Total Returns / Total investments) -1.

The ROI (%) is a similar measure to the IRR or Average annual return in that it accounts for buys, sells, and distributions, but IMO is more useful for periods of less than one year because it is a simple percentage, not annualized.

Like the IRR, it includes the impact of reinvested dividends and other distributions because they are included in the ending value. Reinvestments are not shown in the detail of the Investment Performance report because they are a return and a purchase on the same day.

Note that the Return (%) YTD numbers are downloaded quote data, and are not provided for all securities. Also they reflect the latest downloaded data and are not affected by the As of date that you set.

q_lurker

I looked recently at the Return YTD and ROI (%) YTD numbers with QWin 2019 R17.6 .

It appears that the Return number for a holding is (current market value) + (cash distributions) + (sales proceeds) - (purchases) - (initial market value).

For ROI (%) the formula is (Return) / ((initial market value) + (investments)).

Alternatively, you can look at the Investment Performance report for the same period and

Return = Total Returns - Total investments
ROI (%) = (Total Returns / Total investments) -1.

The ROI (%) is a similar measure to the IRR or Average annual return in that it accounts for buys, sells, and distributions, but IMO is more useful for periods of less than one year because it is a simple percentage, not annualized.

Like the IRR, it includes the impact of reinvested dividends and other distributions because they are included in the ending value. Reinvestments are not shown in the detail of the Investment Performance report because they are a return and a purchase on the same day.

Note that the Return (%) YTD numbers are downloaded quote data, and are not provided for all securities. Also they reflect the latest downloaded data and are not affected by the As of date that you set.

Note Jim's statement "Note that the Return (%) YTD numbers are downloaded quote data, ..."

I don't know the methodology or processing of that downloaded data. For my file, the large mutual funds match exactly if I compare downloaded ROI-YTD vs Quicken-calculated ROI (from 1/1/19 starting date). Some funds (typically bond funds) may show some difference but are typically close (2.59% vs 2.91%, for example).

For stocks, there are definitely variations. Most seem to be within a 1% or so. The largest discrepancy I noted was 10.19% vs 6.93%. I did not note any outrageous values.

At this stage in the year, I would be suspicious of the downloaded data ROI (YTD) - largely because I have not looked for or computed alternate calculations or presentations.

Jim_Harman

I looked recently at the Return YTD and ROI (%) YTD numbers with QWin 2019 R17.6 .

It appears that the Return number for a holding is (current market value) + (cash distributions) + (sales proceeds) - (purchases) - (initial market value).

For ROI (%) the formula is (Return) / ((initial market value) + (investments)).

Alternatively, you can look at the Investment Performance report for the same period and

Return = Total Returns - Total investments
ROI (%) = (Total Returns / Total investments) -1.

The ROI (%) is a similar measure to the IRR or Average annual return in that it accounts for buys, sells, and distributions, but IMO is more useful for periods of less than one year because it is a simple percentage, not annualized.

Like the IRR, it includes the impact of reinvested dividends and other distributions because they are included in the ending value. Reinvestments are not shown in the detail of the Investment Performance report because they are a return and a purchase on the same day.

Note that the Return (%) YTD numbers are downloaded quote data, and are not provided for all securities. Also they reflect the latest downloaded data and are not affected by the As of date that you set.

Let's use the actual names of the columns so there is no confusion.

The downloaded data is in the Return (%) YTD column. The number that Quicken calculates based on your holdings and transactions is in the ROI (%) YTD column.

This seems backwards because the computed return in dollars is in the Return YTD column., but that's the way it is.

q_lurker

I looked recently at the Return YTD and ROI (%) YTD numbers with QWin 2019 R17.6 .

It appears that the Return number for a holding is (current market value) + (cash distributions) + (sales proceeds) - (purchases) - (initial market value).

For ROI (%) the formula is (Return) / ((initial market value) + (investments)).

Alternatively, you can look at the Investment Performance report for the same period and

Return = Total Returns - Total investments
ROI (%) = (Total Returns / Total investments) -1.

The ROI (%) is a similar measure to the IRR or Average annual return in that it accounts for buys, sells, and distributions, but IMO is more useful for periods of less than one year because it is a simple percentage, not annualized.

Like the IRR, it includes the impact of reinvested dividends and other distributions because they are included in the ending value. Reinvestments are not shown in the detail of the Investment Performance report because they are a return and a purchase on the same day.

Note that the Return (%) YTD numbers are downloaded quote data, and are not provided for all securities. Also they reflect the latest downloaded data and are not affected by the As of date that you set.

Thanks Jim -- My error. I was comparing Return(%) YTD vs ROI (%) from a 1/1/19 starting date. Those are not necessarily apples-to-apples comparisons.

I am seeing agreement between ROI (%) YTD and ROI (%) from a 1/1/19 starting date across the board. Both are calculated within Quicken based on users data. That should be expected.

Return (%) YTD is a slightly different, but as long as there are no intervening sales I think it should agree with ROI (%) YTD.

The Return (%) YTD being a downloaded value would be considering change in value and typically dividends distributed on a per share basis
== (Ending value/share + Dividends/share - 12/31/18 value/share) / (12/31/18 value/share).

The ROI (%) YTD would include 'sale income' (aka sale proceeds) and would be treated on the basis of the entire holding
== (Ending value + Dividends + sale income - 12/31/18 value) / (12/31/18 value)

Hope I am not further confusing anyone (or myself).

FOOTNOTE: At some point in time I did determine if the starting value was the 12/31 'closing value' or the 1/1 value. I don't recall which was the answer. Logically, the 12/31 value should be used, but that may not be the case. In 99.99% of the cases, it shouldn't make a difference.

Jim_Harman

I looked recently at the Return YTD and ROI (%) YTD numbers with QWin 2019 R17.6 .

It appears that the Return number for a holding is (current market value) + (cash distributions) + (sales proceeds) - (purchases) - (initial market value).

For ROI (%) the formula is (Return) / ((initial market value) + (investments)).

Alternatively, you can look at the Investment Performance report for the same period and

Return = Total Returns - Total investments
ROI (%) = (Total Returns / Total investments) -1.

The ROI (%) is a similar measure to the IRR or Average annual return in that it accounts for buys, sells, and distributions, but IMO is more useful for periods of less than one year because it is a simple percentage, not annualized.

Like the IRR, it includes the impact of reinvested dividends and other distributions because they are included in the ending value. Reinvestments are not shown in the detail of the Investment Performance report because they are a return and a purchase on the same day.

Note that the Return (%) YTD numbers are downloaded quote data, and are not provided for all securities. Also they reflect the latest downloaded data and are not affected by the As of date that you set.

Thanks q,

I agree with your analysis.

Re: starting value - I experimented with this a while back, comparing the results in the Investing Performance report with Excel's XIRR function. I found that (as it should IMO) the report uses the closing prices on the day before the specified starting date for its "Beg Mkt Value"

Thus a YTD report uses the 12/31 prices when computing its starting value, and to see a report that matches the "Av. Annual Return (%) 1-year" Investing Performance column for 1/14/2019, you should pick "last 12 months" for the date range, which sets the report dates to 1/15/2018 - 1/14/2019.

Jim_Harman

But we are straying from the original question.

@Clint, were you able to figure this out? If you are still having problems, please also make sure there are no Placeholders in your account for these securities, and if you have further questions please make sure you use the exact names of the portfolio columns where you are seeing problems.

Clint

I checked the price history, in the "security detail view", for this particular position, which I've held for less than 2 months & never owned it before..no placeholders, etc . The 1/2/19 downloaded price $14.00 = a $16800 value of the position. Today it's current price is $14.79 x 1200 shares = a position value of $17748. A $948 gain YTD. The "return YTD" column, at these quotes shows a $1260 gain (no dividends or cap gains YTD just pricing gain) vs the $948 value I just detailed.

The "ROI %YTD" column indicates a +7.64%; the "Return % YTD" column indicates +7.4964% gain...close enough, but the $948 gain divided by the 1/2/19 position value would calculate to a 5.64%, not close. ???? Tell me if u see where my math or understanding of the Quicken formulas are wrong.

I'm sure my other equities may exhibit the same aberration, but this particular one stood out like a sore thumb.

After considering this problem, I do believe my preferred metric should be "Return % YTD" rather than "ROI % YTD", but at this time they are both present a similar questionable math outcome/accuracy. Others have mentioned Average Annual Return, or IRR...but my understanding is that IRR is usually employed by accountants trying to determine best possible capital expenditure possibilities.

Thanks for the prior helpful comments but I guess I "gotta call the guy" for further info now.

q_lurker

I checked the price history, in the "security detail view", for this particular position, which I've held for less than 2 months & never owned it before..no placeholders, etc . The 1/2/19 downloaded price $14.00 = a $16800 value of the position. Today it's current price is $14.79 x 1200 shares = a position value of $17748. A $948 gain YTD. The "return YTD" column, at these quotes shows a $1260 gain (no dividends or cap gains YTD just pricing gain) vs the $948 value I just detailed.

The "ROI %YTD" column indicates a +7.64%; the "Return % YTD" column indicates +7.4964% gain...close enough, but the $948 gain divided by the 1/2/19 position value would calculate to a 5.64%, not close. ???? Tell me if u see where my math or understanding of the Quicken formulas are wrong.

I'm sure my other equities may exhibit the same aberration, but this particular one stood out like a sore thumb.

After considering this problem, I do believe my preferred metric should be "Return % YTD" rather than "ROI % YTD", but at this time they are both present a similar questionable math outcome/accuracy. Others have mentioned Average Annual Return, or IRR...but my understanding is that IRR is usually employed by accountants trying to determine best possible capital expenditure possibilities.

Thanks for the prior helpful comments but I guess I "gotta call the guy" for further info now.

@Clint: As Jim identified, you really should be checking the math using the 12/31/18 closing value, or whatever date you have a value for prior to that date.

Also, if you would like to identify the security, we could do the same math or perhaps better identify what is happening.

my understanding is that IRR is usually employed by accountants trying to determine best possible capital expenditure possibilities.

Not really with respect to Quicken. Quicken describes their calculation as: "a percentage equal to the interest rate on a bank account that would
give you the same total return on your investment". My opinion is that Average Annual Return (aka IRR) is the most universal calculation Quicken offers that addresses all types of return and the timing of those returns. It is a calculation most reflective of your personal investment decisions. For short term period (like beginning of year to now), the results can be deceptive, but that is the actual math, not Quicken's implementation of the math.

Jim_Harman

Thanks for the details, Clint.

What was the 12/31 (or most recent earlier) share price?

Clint

That was my problem. I was using the 1/2/19 closing quote, not the 12/31/18 closing quote..which is the 1/2/19 beginning price of course...

Guess I just couldn't believe that BGX had appreciated that much in less than two weeks, so I didn't believe Q was correct!

Thanks for the "brainstorming" help