Investment Performance Year to Date

Gary R

I have Returns Year to Date on my portfolio register and the numbers are correct.  Is there a way to figure your Year to Date return Percentage based on your portfolio value during the year.
Example:
Returns year to date===$25,000
Beginning portfolio on 1/1/2022------$250,000
Buys during 2022=====$30,000
Sells during 2022------$10,000

I tried the ROI YTD under customize view---but the numbers were way off

Jim_Harman

Usually ROI (%) YTD gives correct results for individual securities, but see this discussion
https://community.quicken.com/discussion/7864889/account-level-amount-invested-and-roi-are-calculated-incorrectly-when-a-security-is-sold

Also when referring to Portfolio view columns, please use the exact names of the columns. There are several columns with similar names, and this can lead to confusion.

In your example, what is the ending portfolio value? Were there any transfers into or out of the portfolio? What value do you see in Quicken for the ROI (%) YTD? What do you think it should be?

Gary R

Morning Jim:  I'm happy to see that you are still active and with us on this site.  You have always been helpful and replied to my questions in the past and always appreciate your time.
My Return Year to Date is correct.  ROI (%) YTD is way off.  However, This year I've had many buys, sells, transfers in my portfolio.  The ROI(%) YTD shows ( - 4%) as of today.  It probably should be closer to (-20% YTD)I'm having a really bad year and my growth stocks are getting clobbered. 
My ROI % YTD would be (-15%) if I simply just took my loss YTD and divided over my beginning portfolio value on 1/1/2022) I know that is not correct since I made a number of buys and sells this year.
 

Gary R

Jim---It looks like this has been an ongoing issue for years---I don't understand why Quicken cannot correct this issue.  I'm sure there are some very smart employees working there that can figure this out.

Jim_Harman

I agree that the account level ROI (%) calculation should be fixed, although as you can tell from the linked discussion, there is some disagreement on this issue.

One thing you could do is to focus instead on Quicken's "Avg. Annual Return (%)" numbers. These use an Internal Rate of Return (IRR) calculation and are annualized, so they are most useful for periods of one year or more. For shorter periods, they assume the performance will continue at the same rate for a full year, so the reported gains or losses are larger than you might expect.

The same IRR calculation is used in the Investment Performance Report. To see a reasonable YTD percentage return with that report, you can set the Date range to Yearly and Current Year. In that case, the assumption is that the performance will be flat for the rest of the year.

Gary R

I think I'll just take my highest portfolio value invested this year and divide by my loss to come up with a reasonable number.
Example:  If I start with $100,000 on 1/1/2022, net investments for the year after buys and sales, +25,000, the I'll just use $125,000 as my portfolio value and divide by my loss to come up with a number.
Does that make sense?

Jim_Harman

Let's be very clear about the terminology. It's not clear what you mean by "highest portfolio value invested this year".

Buys and sales within the portfolio should not affect the portfolio's performance, but money or assets transferred in or out should be included in the calculation.

If
SV = Starting portfolio value
EV = Ending portfolio value
TI = Transfers in
TO = Transfers out

Then I think the % gain or loss should be
((EV + TO) / (SV + TI) - 1) * 100

 

Gary R

Way over my head---lol
At 74 my mind just doesn't get it---Let's put this to rest--thanks

Jim_Harman

Oh but this is so interesting, especially when you try specific examples and compare to the IRR calculation!

The IRR takes into consideration the timing of the transfers in and out but the ROI calculation ignores timing. The formula above gives a result close to the IRR if the period is one year and the transfer in is at the beginning of the year and the transfer out is at the end.

For example, say the account holds a security worth $1,000 at the start of the year and $900 at the end. Then assume you deposit $10,000 on Jan 2 and withdraw it on Dec 30. The formula above gives 

((900 +10000) / (1000 + 10000) -1) * 100 or -0.909%

With the same amounts and dates, this matches the Investment Performance report performance of -0.91%.

But if you deposit the $10,000 on Dec. 29 so it it only in the account for one day, the IPR gives a performance of -9.71%. Its calculation is driven almost entirely by the performance of the security.

A variation on the ROI calculation would be to use the net transfers rather than considering them separately:

(((EV + TO - TI) / SV) - 1) * 100

In this example the ROI would be -10%.

Which ROI calculation is correct? I guess that is open to discussion. It appears that Quicken uses the second formula for this simple example.

Gary R

Oh Boy------LOL
Your math skills are impressive----

Gary R

Jim---I know you're very strong with your math skills----Let me know if you agree with my numbers below

Portfolio market value on 1/1/2022====$100,000
Return Year to date=(-$25,000) Loss)
Purchases during this year-------$200,000
Sales during this year-------$ $175,000

Beginning $100,000 + $200,000 -$175,000 - $25,000==$100,000 Ending portfolio value

My question is what is the return on investment for Year t0 Date?

We know the S&P 500 is down 21.63% Year to Date

Let me know if this is correct for Year to Date returns
$100,000 + $200,000=-$300,000 - 175,000= $125,000 (Net Invested for Year)

(-$25,000/$125,000= -20% Loss)----Year to date return on investment.

Jim----does this look correct to you?

Jim_Harman

Were the purchases and sales made inside the portfolio, or was money deposited or transferred into the portfolio for the purchases and withdrawn or transferred out after the sales? Another way to ask this is Do you consider the cash for the purchases and the proceeds to be part of the portfolio or is it separate?

Assuming it is the latter, then my second calculation gives

(((    EV      +    TO     -     TI     ) /     SV    ) - 1) * 100
(((100000 + 175000 - 200000) / 100000) - 1) * 100
= (75000 / 100000 - 1)  * 100
= -.25 * 100 
= -25%

Quicken calculates the account's ROI (%) as -20% for this example if the cash is included or -25% for the securities alone. 

Gary R

Purchases and sales made inside portfolio.  I know that I can't use Quicken to figure my Year to Date ROI%, and just wanted to do the math myself.  I wanted to know if you thought my calculation made sense.

Jim_Harman

If the purchases and sales were made inside the portfolio, i.e. no money was transferred in or out, and it started and ended with $100,000, then I would say your overall ROI (%) YTD would be 0%.

But your example is pretty unrealistic. If the portfolio started with $100,000, where did the $200,000 for purchases come from?

Gary R

I guess I'm not explaining it properly.  Let's just forget about it

Jim_Harman

For the benefit of others who may be following this discussion:

If by "portfolio" you mean just the securities you hold, you will get a different result for performance than if you include the cash in the calculations.

Quicken can calculate it either way, depending on whether you select "No security (includes Cash)" in the Securities customization for the Investment Performance report or portfolio view.

Gary R

Jim--I was only interested in my Year to Date % Return on my securities.  (No cash or bonds)
I know my Return Year to Date is correct on Quicken.  I have checked the numbers with my brokerage firm and it agrees.  However, as you know, the ROI% YTD is not accurate and cannot be used for my purpose.
I had numerous buys and sells this year.  The ROI% YTD number I get on Quicken is way off and makes no sense.  I was simply asking you if my math looked correct based on my original question early this morning.  I know Quicken cannot give me the answer that I'm looking for.  I was hoping that you could confirm that my manual computation was reasonable in coming up with a ROI % YTD.

Jim_Harman

I can't answer your question because you have not defined how "return year to date" is calculated. Is that one of Quicken's portfolio columns? If so, what is the exact name of the column?

Or maybe it is EV + TO - SV - TI?  

Note that the Portfolio View "Return (%) XXX" columns use data downloaded from Quicken's quote provider and do not reflect your trading activity. They assume you have held the security for the full period with no trading activity and have reinvested any distributions. Sometimes that data is out of date.

Gary R

Return YTD is one of the columns you can enter in the portfolio register.  On the top right corner, I have closed positions checked.  Therefore, all my sales during the year with the gains and losses YTD are in the numbers.

Jim_Harman

What version of Quicken are you running? In the QWin US Premier R41.10 Portfolio views, I see Gain/Loss YTD. Is that what you mean?

Gary R

R-41.10--Windows 10-------Gain/Loss YTD is not what I am referring too
There is no Gain/Loss--Year to Date-------Check again--never been an option

Jim_Harman

OK you are right - for some reason there is Gain/Loss for other time periods but not YTD.

Back to my original question, for some reason in the test file I was using, the Return YTD and other Return XXX columns are not included in the Portfolio view selections. Very weird.

So now I have switched to a different file and we are on the same page.

Quicken's Return numbers include its "Amount invested" value, which may not be what you would expect. See the discussion I linked earlier. Your calculation may be correct for the example, but I think there are cases where it will provide strange results.

Gary R

ok-tHANKS