Tracking performance of an overall account using single "fund"

prizym

Hi,

I have an account with a robo-advisor, which consists of various constituent ETFs which are bought/sold on a monthly basis.

To date I've been tracking performance by manually entering all the buy/sells in the account, adding MiscExp transactions for expenses, etc. (Note: downloaded transactions are not an option). This is a lot of work, and frankly I've decided I don't really care what the constituent ETFs are doing, but rather just the account overall.

So, I want to simply if it greatly.  What I want to do is to have a single "fund" in the account at a fixed price which tracks its value and performance.  Each month I would update it with buys/sell/div income, etc.  This is fine for value, but it's a bit tricky to get right for performance.... Note that I don't care about capital gains, etc. because this is a tax-free account.

I was thinking that I would maintain the fund price at $1 and use Buy/Sells when adding/removing money from the account.  Each month, if the value of the fund increases, I would enter a Reinv Div transaction for tracking the increase.  Eg, if value increased from $500 to $570 one month, I'd enter a ReinvDiv for $70 at $1 price.

Now, this works fine when the fund value is increasing, but I haven't figured out a great way of what to do if the fund value decreases. Any suggestion of what kind of investment transaction to use for a month-over-month decrease in account value?

Finally, any other suggestions?  For tracking performance instead of maintainnig price at $1 like a money market fund, I could keep the # shares fixed (eg, 100 shares) and increase/decrease price as necessary, but I am not sure how to handle the addition of new funds into the account when this happens.

Thanks for any advice!

q_lurker

I think you have found the dilemma  - neither fixed price nor fixed shares are ideal.

I am not doing this directly but I would bias toward the semi-fixed shares.  That is, I would try setting it up as if I had 100 or 1000 shares, and then updating the price accordingly weekly, monthly, or however often you choose.  

The issue with that becomes what happens when you add to (or subtract from) the fund.  What I would try for that would be 1) add the cash to the account, 2) buy shares at whatever your current price is, and 3) do a reverse stock split to revert your share count to the easy-to-manage 1000 share count.

Example:  You start with 1000 shares at $11/share for $11,000.  For several months the value varies - 11.02, 10.50, 9.63, 12.07 and so on always as value / 1000.

At that point you add $1,000 to the account; your account goes from $12,070 to 13,070.  You buy 82.85 shares at 12.07 = $1,000; you now have 1082.85 shares at 12.07 = $13,070.  You could carry on from right there - you'd figure the current price as value / 1082.85.  To make future tracking easier, you do a stock split at 0.923489  (= 1000/1082.85) with the price/share adjusting from 12.07 to 13.07.  going forward, prices are value / 1000 again.  

To reiterate, I am not doing that and have not tested it out, but I suspect that would better allow you to track the ups and downs of the market and present some level of reasonable performance measure without being swayed by your additional contributions.