Investment asset security "types" vs. "classes"

lpreinhold

I use different investment advisors to manage my personal portfolio. Underlying investments are varied, including large and small cap equities, domestic and international; preferred stocks; US federal government securities; municipal bonds; corporate bonds, domestic and international; mutual funds; hedge funds; REITs; limited partnerships, etc.  Each of the investment advisors categorizes the underlying investments into their own definition of asset classes. Unfortunately there is no consistency among them and the same type of investment can show up in multiple classes depending on who the advisor is.

Therefore, in Quicken, my overall portfolio allocations are difficult to construct as there are so many underlying classes. So I would like to assign consistent asset classes inside Quicken, which is where I get confused. Quicken has both security "types" and "classes." The default types are Stock; Mutual Fund; US Savings Bond; Employee Stock Option; ESPP; CD; Market Index; and Other. The default classes are Cash & Money Market; Large Cap Stocks; Small Cap Stocks; Domestic Bonds; and Other.

I cannot find good definitions of what is supposed to be the difference between a type and a class in Quicken. I can create custom types and classes, but want to make sure - before I do a lot of work - that in the end I will get what I am looking for in reporting. I am tempted to create my own custom asset types and classes and just make them identical, but that seems like it cannot make sense as Quicken must have had something in mind when they created the structure of having both a type and a class for the same underlying security. Any help would be appreciated.

[Edited (paragraphed) for readability]

bmciance

Think of Type as the high level classification.  Class is the next level down.  So you have "Stock" as a type and then "Large Cap Stocks", "Small Cap Stocks" etc as the class.  That said, you don't really have to use them that way...

For your situation, you could try creating your own types and classes but from what you are saying you have the same security in different accounts classified different ways.  Unfortunately in Quicken you cannot have a different type or class for the same security in different accounts.  You could attempt to use the type field for securities in one account and the class for securities in another account.  I'm not sure if that will work for what you need but that is sort of what I do.  I have one advisor who classifies securities his own unique way and another that pretty much uses standard classifications so I made custom asset classes to get what I need.  I didn't change what was there, I just added my own custom ones.  This way I could always use the originals if necessary.  Type, I pretty much left was it was.  I then use investment tab views to get the reports that I want from each.

Good luck!

Jim_Harman

Another way to think about the difference between investment types and asset classes is that each security can only have one Type and Quicken may track different information about the security depending on its type. For example Bonds have Maturity dates and Call dates, which do not apply to stocks.

On the other hand a security, particularly mutual funds and ETFs, may hold one or more Asset Class. For example a balanced mutual fund might hold a combination of large cap stocks, international stocks, and bonds. Quicken can download the asset classes for publicly traded securities, or you can set the allocations yourself. Your overall asset allocation is an indication of how risky your portfolio is.

q_lurker

Agreeing with the prior comments.  Some additional considerations 

Long ago, I wanted better delineation between domestic and international holdings.  So I created separate types for Int'l Equities, Int'l MF, US Equities, and US MF.  The equities seem to work pretty well.  But by not using the built-in type for Mutual Funds, I lose the ability of the Portfolio Views to show Morningstar ratings and such for the mutual funds I do own.  I am not sure I would make that choice again.  I think I have posted an Idea that the M* data should be presented based on ticker rather than type, but that has never been acted upon. 

Your list identifies "US federal government securities".  In the larger grosser breakdown, those are bonds and as Jim pointed out by using the Bond Type, you get Maturity date etc.  Details associated with Bond type include Treasury Bills, Bond, or Note data.  If you create a separate type, it won't maintain that type of detail.  That said, there is still not a lot further your can go with that further information.  For example, I can't think of or spot any place I can see data about Bonds with the Bond Type= Treasury Bill.  So although the differentiation is there, it is almost worthless. 

Another consideration - Preferred Stocks.  While they are stocks, I have advisors who treat them as Fixed Income investment (essentially bonds+.  Should I use Type = Stock, my US Equity, or Bond?  Becomes a user choice.

All in all, I would discourage a policy that ties one real world security to two different Quicken securities just because two advisors categorize the security differently.  That 1 real world = 2 Quicken approach is definitely contrary to the inherent Quicken model and seems to lead to unforeseen consequences.  There are cases where users have done it with some success but I can't recommend it.

Glad you are thinking ahead on developing an approach that works for you.