Using add function vs. boughtx for shares added to mutual funds; how is IRR calculated

I have been using Quicken for years and have used the add function mostly for shares I buy for my mutual funds as I have not hooked it to my bank account because I thought it easier to do for tracking my purchases and returns. I also have jumbled boughtx for some purchases form sold fund shares and used a dummy transfer work around acct. that was discussed in a post about 10 years ago. Now I am thinking that I was an idiot because it do not see it capturing my rate of return accurately when I look at the returns on my statements and compare it with what I have in Quicken. Does just using the add share function impact the IRR on these? I have been been searching on this topic and I am seeing some say that it does and am looking for confirmation and if so, it there a fix to this other than going in and correcting all my entries form 1998 onward. Yikes. Thank you for any help.

Comments

  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭

    The issue should not be due the use of the Added or BoughtX action transactions.  You may want to review the built in help on the topic: press F1


  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    Using Add Shares versus Bought or BoughtX -- Fundamentally, I agree with Sherlock that it should not make a difference.  But if you have been doing this for over 20 years, there may be something to your concerns.  Over the years, it is possible that Quicken's handling of Add Shares has been changed.  Exactly how you handled Add Shares may also be a factor. 

    I'd investigate your question by looking at the Investment Performance report for a security in question for a time frame of interest.  The report should show detail (a customization option).  If the report is showing the real 'cost' of the shares added on the applicable date, the calculation should be accurate as is.  I believe Quicken will be basing the Add Share transaction value using the closing market value for that security for the date of the Add Share transaction.  From your description, that should be close to the price you paid.  (If you used a Bought or BoughtX transaction, I believe Quicken would use the actual cost of the transaction rather than the closing market value.)

    There can be other reasons for a broker's report to differ from Quicken's calculation, so you might need to reveal some more details to get to the bottom of the differences, before making 20+ years of changes.   
  • Ericvq
    Ericvq Member
    Thank you both so much. I had also thought the IRR should not be affected no matter how you add the shares as long as the dates and prices were correct. i am going to take the suggestion of comparing of returns for different time periods and go through some funds year by year to see how I added shares. Will report back either with what I find.
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