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Return YTD absurdly incorrect?

Charlie@

On Jan 5, 2022 I transferred a number of shares from one account to another, value $65,064 and these are the only shares of that security in that account. Reinvestments during this year were approx $650, and today's value is $57,206, roughly -$8500. But when I go to the Investments tab and look at the "Return YTD", it shows a +$27,616 for that security. How is Quicken calculating that number, especially this year when almost nothing is in positive territory?

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Mark1104

probably because it is using the COST BASIS of the transfered shares in its calcuation of ROI. ALso, when you measure a period of less than 1 year, you can get funky results,

My approach in this situation is to measure the ROI for BOTH Accounts at the same time, so the effect of the add / remove transactions are netted out. Also, measure the entire year, not YTD..

ALso, I tend to use the performance report and not the Investing / Portfolio view,

Rocket J Squirrel

Mark1104 said:

probably because it is using the COST BASIS of the transfered shares in its calcuation of ROI.

Cost Basis is not used to calculate ROI or Return YTD. Amount Invested is what's used.

These might or might not be the same, depending on whether you've ever sold any shares of the security in question.

q_lurker

Note that Return $ is defined as the "Market Value + Cash Income + Sale Income less Dollars Invested.
In the case of a security added to the account during the YTD period, the "Dollars Invested" is the "cost basis" amount shown in the Add Shares transaction.

The $65,000 value of the shares transferred on 1/5/22 is immaterial. What was the basis of those shares?
You have identified the Cash income of approximately $650.
Presumably there was no sale income from sale in shares in this account YTD.
You identified the Market value as $57,206

Return YTD = 57,206 + 650 + 0 - _______ = 27,616. It appears your basis was about $30,240.

As @Mark1104 suggests, if you transferred the shares from one Quicken account to another, you might be better served by including both accounts in the portfolio view and Grouping by Security. In that case, the program should use the value of the security on 12/31/21 as the "Amount Invested" for the YTD calculation. (I did not immediately confirm that behavior.)

Also as Mark and others suggested, Return is not always a good measure of performance and different return measurements can sometimes produce flaky results.

Charlie@

So the initial amount invested was around 6 years ago plus subsequent reinvestments, so if it is applying all of that investment this year because the shares we're transferred this year it is still an absurd calculation. Quicken knows when the investment lots occured (because I can see them in the account) and not to use them in the YTD calculation.

Charlie@

Thanks for the insights guys. Every other security in the portfolio has a value for return that looks correct. This is the only one that is whacko and I presume it has something to do with the transfer happening in this calendar year. Hoping it resolves itself in January.

Mark1104

@Charlie@

!) look at the portfolio view, GROUPED by Security - the ROI should be reasonable (other than it's for less than a full year)

2) run the report called INVESTING, INVESTMENT PERFORMANCE.....and subtotal by Security, choosing "Yearly" as the date range. The ROI should be reasonable for the reality.

q_lurker

As a possible correction to my note, upon re-reading your original post, I see you termed the $650 as reinvested. So it was likely not "Cash Income" and it likely does not add to the "Amount Invested" term The math for your case could be as simple as
Return YTD = 57,206 + 0 + 0 - _______ = 27,616.
Your "Amount Invested" would then about $29,590 and that should be borne out by adding the Amount Invested column to the portfolio view you are looking at. I'd have to play further with some test cases to conform how reinvestments are handled and variations might exist.

Considering the Return column (not Return YTD), you can adjust the starting date for that return calculation through the Options / Portfolio Preference setting for starting date. If you set that to 1/5/22 (date you added the shares), you should see a Return figure in better agreement with your expectations. That is, the Amount Invested value used should be the closing value for the stock on 1/5/22 rather than the basis value used in your Add Shares transaction.

This will only "resolve itself in January" because a new YTD beginning will be initiated that will start a new start for the YTD calculation.

As a general rule, I find it essential to understand how Quicken is calculating these types of values rather than assuming the programming does what I might have chosen. One can't draw a sensible conclusion as to what numbers mean without understanding how those numbers were determined.

Mark1104

@Charlie@ - and if you run the report, that reinvested dividends will not appear because a reinvested dividend is not 'new money' or 'money withdrawn' from the investment - it is money out and money immediately back into the investment in the same nano-second.

In an efficient market, the value of the investment dropped by the EXACT amount of the dividend, but then your investment rose by that same amount when you re-invested, so your net position did not change.