How adaptable are Quicken's IRR calculation capabilities?

There are countless ways to characterize a given investment, e.g. prior (funds no longer invested), momentum, small cap, pre-IPO, indexed, closed MF, etc. Does Quicken have the capability to allow users to tag each investment with a weighted set of such descriptive qualifiers and have the software calculate an IRR for the set of investment cash flows that have been given the same tag, or for the set of investments with a combination of tags, e.g. current (funds still invested) indexed ETFs investing in US micro-cap stocks?
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Answers

  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited November 2020
    Quicken has a limited ability to tag individual securities, using the Asset Class (one per security) Security Type and Investing Goal fields. 

    But in the Investment Performance Report, each security is either included or excluded. There is no way to assign weights to the characteristics.

    You could export the report data to Excel and do additional analysis there.
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  • Jim -
    I am not a Quicken user. I am using the answer to this question to determine whether to become one, so please assume that I know little about the software. My takeaway from your initial answer is that there are three fields that could be used to partially accomplish my goal. Am I correct in assuming that the Asset Class & Security Type fields probably have a limited, pre-determined set of inputs? Does the Investing Goal field allow customization? In other words, could I make up my own descriptor in that field so that Quicken would calculate the combined IRR for all investments carrying that tag? I assume that only one value can go in that field. So, setting aside weighting issues, if the Investing Goal field can be used in this manner, then to calculate IRR across my entire portfolio for a variety of different characteristics specific to a subset of them, I would need to keep a table of the various tags associated with each investment and swap them into the respective Investment Goal fields each time I wanted the software to calculate an IRR value associated with that characteristic. Am I understanding the software's capabilities correctly? Would the software be able to return other performance data than IRR, such as standard deviation or Sharpe ratio?
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    • You can have 31 different "Security Type" selections; 10 are pre-defined
    • Asset Classes are predefined as 8 (including "undefined" as the 8th).  The new release allows additional asset classes to be user defined, but that tool is not fully debugged as I write this.  Any single security can have a mixture of asset classes, user defined or as downloaded from Quicken's data supplier.
    • Investing Goal can be up to 15; 5 are predefined but all 15 can be user defined (the original 5 can be changed as desired).
    While there are workarounds, the expectation should be one type and one goal per security.  A given security would not have a goal of "Prior" for some shares and "Momentum" for other shares. I would not consider toggling (swapping) any of those fields to be desirable as a frequent occurence -- not a user-friendly interface.   

    The Investing Portfolio Report (which computes Average Annual Return, aka IRR) will subtotal based on any of those three groupings.  If grouping by Asset Class, securities with a mixture of classes will be grouped together under Asset Mixture.  In its calculation, it uses the transactions and data in your portfolio (your actual buys, sells, price data, dividends, etc.)

    A portfolio value report will break a mixed asset class security into its separate components, but that is valuation only (not performance).

    The software is not capable of standard deviations or Sharpe ratios.

    There has been a feature to present risk/reward evaluation based on the predefined asset classes.  How that plays out with the new user defined asset classes remains to be seen.  

    This program is NOT the holy grail of investment software.  
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    Asset Classes have recently been expanded to a maximum of 18, 8 fixed plus 10 user definable.

    You can make as many investing goals as you want.

    There are several built-in Security types. These affect how the securities are treated in the program. You can define more if you want.

    Quicken includes an Investment Performance report that does the IRR calculations. You can filter this report by Account, Security, Security Type, and Investing Goal.

    You can subtotal the report by Month, Quarter, Year, Account, Security Type, Investing Goal, or Asset Class.

    Any analysis beyond that would require an export to Excel.

    I suggest you try Quicken's 30 day money back guarantee. If it does not meet your needs, you can cancel your subscription and get your money back. 
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  • q_lurker -
    lol, I guessed Quicken was not the holy grail of investment software. Have you found it??
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    Quicken is personal finance software, primarily for budgeting and tracking income and expenses. It will also track your investments, but I would agree with @q_lurker that it is not the holy grail of investment software.
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  • Thanks for both of your inputs. Does anyone have a suggestion for a sophisticated investment-tracking software tool?
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    Thanks for both of your inputs. Does anyone have a suggestion for a sophisticated investment-tracking software tool?
    Not been on my search list.  Maybe it should be, but I do rely on pros for advice and direction in that area.
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    Quicken combined with a Morningstar subscription works fine for me, but you might consider the tools listed here on the Bogleheads forum:
    https://www.bogleheads.org/wiki/Tools_and_calculators#Portfolio_tools
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