none
Investment performance reports RRS feed

  • Question

  • So with the close of 2019 I was keen to find how my portfolio performed. However when selecting the performance report I was confused when I saw that the total return was around the 4% mar, yet the annualised return was up at 18%!

    So tonight I made a dummy portfolio and set an account with £1,000 on 01/01/19. A number of buys and sells throughout the imaginary 2019, culminating in an account balance of £2,000 on 31/12/19. 

    I expected the result to be a clear cut 100% gain, but no. The total return was apparently 40%, and the annualised gain 275%.

    How is MS money getting these figures? Is there any way to get a more realistic report? I have tried all reports in the portfolio manager without luck.

    Any help greatly received.

    Thanks 

     
    Tuesday, January 14, 2020 7:46 PM

All replies

  • Annualized means to compute what the return would have been for the year at that same rate of return.

    Imagine 360 days in a year for easy example. You buy something for £100 on Jan 1, and sell it £110 for 36 days later (1/10 of our year). That would seem to be a rate of return of  10% over that period, but annualizes to more than 10 * 10%.  Much more Actually more like an increase of 259% annualized due to compounding... In other words, you would have about  £359 after a year of gains at this rate.

    If you want to read about the math or spreadsheet functions that correspond to this, see IIR (internal rate of return) if I remember correctly.:

    I like the Portfolio for this, instead of reports. Another useful column is Gain. It does not take dividends into account. These are the columns that I usually have  set up in the Portfolio:




    • Edited by Cal LearnerModerator Friday, January 31, 2020 11:29 PM Corrected. TRs are not annualized
    Tuesday, January 14, 2020 9:36 PM
    Moderator
  • Thanks for your reply Cal.

    I guess the performance calculations are a nit more complex than I am understanding. I just don't understand when I make a dummy account and start the year with 1k, and end with 2k, the reported investment performance is 50%, when it is clearly 100%.

    Wednesday, January 15, 2020 7:55 AM
  • tristan,

    Please be aware that the software calculates the performance of the investments, not the account.  The account performance is then the average of it's investment(s) returns.

    You stated:

    "A number of buys and sells throughout the imaginary 2019" , and not knowing the details, perhaps the investment did gain 50%, and the rest of the gain in your account was simply purchase of more investments.

    To simplify, if you purchase one investment on 01/01/19, and it doubles by 31/12/19, then you would see your 100% gain.


    • Edited by ameridan Wednesday, January 15, 2020 4:59 PM
    Wednesday, January 15, 2020 4:46 PM
  • I guess the performance calculations are a nit more complex than I am understanding. I just don't understand when I make a dummy account and start the year with 1k, and end with 2k, the reported investment performance is 50%, when it is clearly 100%.

    How about exporting that dummy investment account as a loose QIF, calling the file, for example, test.qif. Rename the qif file as test.txt. Then open that file with Notepad. Copy the contents into a reply on this thread.

    Somebody will probably try, perhaps after some time,  to replicate your test. If the person is in the US, that person will need to adjust the dates to mm/dd/yyyy format from dd/mm/yyyy. Don't you worry about that.

    The QIF would not be expected to have an account number or other personal info.

    Thursday, January 16, 2020 12:52 AM
    Moderator
  • Thanks for that idea. Here is a test account. Starting 01/01/19 with £1,000, and ending the year with £2,000. Two investments each gain 50%, total gain is obviously 100%. However the reports show 50% rate of return, and 126% annualised. 

    !Type:Invst
    D01/01'2019
    T1,000.00
    NBuy
    YCompany 1
    I10
    Q100
    ^
    D30/06'2019
    T1,500.00
    NSell
    YCompany 1
    I15
    Q100
    LInvestment Income:Capital Gains
    ^
    D01/07'2019
    T1,000.00
    NBuy
    YCompany 2
    I10
    Q100
    ^
    D31/12'2019
    T1,500.00
    NSell
    YCompany 2
    I15
    Q100
    LInvestment Income:Capital Gains
    ^

    Monday, January 20, 2020 7:45 PM
  • I made a new file, imported the QIF as a recovered account. I let Money set up the account as a new account.

    Money Plus. Changed to Advanced reports. This is "Performance by investment account" report with the customized changing of dates and having no Subtotal.

    Any other report you would like to see?

    ===========The QIF converted to MM/DD/YYYY format===================

    !Type:Invst
    D01/01'2019
    T1,000.00
    NBuy
    YCompany 1
    I10
    Q100
    ^
    D06/30'2019
    T1,500.00
    NSell
    YCompany 1
    I15
    Q100
    LInvestment Income:Capital Gains
    ^
    D07/01'2019
    T1,000.00
    NBuy
    YCompany 2
    I10
    Q100
    ^
    D12/31'2019
    T1,500.00
    NSell
    YCompany 2
    I15
    Q100
    LInvestment Income:Capital Gains
    ^

    Monday, January 20, 2020 10:05 PM
    Moderator
  • All I am looking for is a report that shows the true gain in % in my portfolio value. That example starts the year with 1,000, and ends with 2,000.  That is a 100% gain, not 50%, or 126%.

    Thanks for your help.


    Tuesday, January 21, 2020 8:49 PM
  • All I am looking for is a report that shows the true gain in % in my portfolio value. That example starts the year with 1,000, and ends with 2,000.  That is a 100% gain, not 50%, or 126%.


    I see your point.
    Wednesday, January 22, 2020 5:34 AM
    Moderator
  • Cal,

    Where can we find definitions for the portfolio performance parameters TRwk, TR4wk, TR3mth, Ann.ret. etc. etc?  It seems to me that TR means "Total Return", therefore are none of the TR columns are annualized?  Is "Ann. ret." the only annualized performance metric?  Formulas for these would be great.

    Thanks,

    Mike

    Friday, January 31, 2020 9:23 PM
  • Mike,

    This article doesn't have formulas per se, but it does have good descriptions/definitions of all of the available columns.



    • Edited by ameridan Friday, January 31, 2020 11:03 PM
    Friday, January 31, 2020 11:01 PM
  • Cal,

    Where can we find definitions for the portfolio performance parameters TRwk, TR4wk, TR3mth, Ann.ret. etc. etc?  It seems to me that TR means "Total Return", therefore are none of the TR columns are annualized?  Is "Ann. ret." the only annualized performance metric?  Formulas for these would be great.

    Thanks,

    Mike

    You are correct.  I was mistaken. I use those columns regularly, but went through a lapse.

    The "Performance by investment type" report tries to make annualized numbers, but we suspect its method is flawed.



    Friday, January 31, 2020 11:33 PM
    Moderator
  • In the example above, the duration of both investments was 6 months, which I would consider short-term.  As explained, since the return of both investments was 50%...

    Total Annualized Return Annual percentage return on investment. Returns for the short-term investments are projected to one year; returns for the long-term investments are averaged to one year.

    it does seem like they both should have been projected to be 125% for the year (or at least 100%, as tristan surmised), so it appears that Money considers both to be long-term investments, hence the average of 50% return is reported.  At least we have an explanation now.





    • Proposed as answer by ameridan Saturday, February 1, 2020 12:58 AM
    • Edited by ameridan Sunday, February 2, 2020 8:41 PM
    Saturday, February 1, 2020 12:56 AM
  • ameridan,

    Thanks for the link to those definitions.  The length of the table makes it clear that one has to be very precise when talking about the return on an investment or on an account.

    In the case of an investment that grows 50% over 6 months, one way to look at the return is to calculate the interest rate that would provide that return if compounded daily.  Doing the math, $1000 invested at 40.6% (not likely!) would grow to $1500 after 6 months and to $2250 after 12 months.  This is a return of 125% for one year, which is the "Annual % Return" that Money reports in one of the screen shots above.

    This sort of "return on investment" complexity is one reason why investment advisors and accountants have jobs.


    Bill Becker

    Saturday, February 1, 2020 2:54 AM
  • Well said Bill!

    The portfolio column definitions that ameridan attached are for an individual investment.  Has anyone confirmed the Total Return (TR) and Annualized Return values Money displays for an account?  I've been unsuccessful, using Current market value minus beginning market value, divided by beginning market value, for a TR.  How does Money calculate these values for an account?

    Thanks

    Mike

    Saturday, February 1, 2020 6:51 PM
  • How I would arrive that the 127.55 and 124.50 value. 

    For Company 1:

    • We know that Total Return of 'Company 1' is 50% for 6 months or more accurately 180 days or (180/365) years
    • The formula for Compound Rate of Return = POWER((1 + Total Return Rate),(1/years)) - 1
    • Where: Total Return Rate is 50%
    • and 'years' is (180/365)
    • Plugin the formula and you will get 127.55% (for Company 1)
    • and 124.50% for Company 2
    <style type="text/css"><!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}--></style>
    Date Quantity Price Amount Investment Type
    1/1/2019 100 $10.00 $1,000.00 Investment 1 Buy
    6/30/2019 100 $15.00 $1,500.00 Investment 1 Sell $500.00
    7/1/2019 100 $10.00 $1,000.00 Investment 2 Buy
    12/31/2019 100 $15.00 $1,500.00 Investment 2 Sell $500.00
    Beginning Balance Ending Balance Days Total Return Rate N Period (years) Annualized Return
    Investment 1 $1,000.00 $1,500.00 180 50.00% 1 0.4931506849 127.55%
    Investment 2 $1,000.00 $1,500.00 183 50.00% 1 0.501369863 124.50%
    Total Return Rate = (Ending Balance - Beginning Balance) / Beginning Balance
    Compound Rate of Return = POWER((1 + Total Return Rate),(1/years)) - 1

    Sunday, February 2, 2020 8:20 PM
  • Just to follow up to my last post. In general, I have given up on using Money investment return calculation. I relied primarily on my broker(s) calculation and occasionally spot check them by exporting the transactions and then use Google Sheet/Excel XIRR function to perform my own calculation to see if they match. With the spreadsheet, it is a bit easier to add/remove transactions without causing the rest of the accounts balances in Money to change.

    Using the same fact above, the calculated Internal Rate Return (IRR) is

    50.17%

    which I think is what the OP was looking for.

    <style type="text/css"><!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}--></style>

    1/1/2019 $1,000.00 50.17%
    12/31/2019 -$1,500.00

    =xirr(C15:C16,B15:B16,1%)

    The XIRR calculation is fairly straighforward. You just need to keep track of cash flow in/out (essentially purchase/sell) date and amount of the account. Then make sure to enter the current account value in negative form for the last row (-1500 in above) example.

    Re: given up on using Money investment return calculation

    Some of the blame is mine: my data for my investment accounts in Money are often not entirely "clean". Over the year, stock splits, change of investment (transfer from one investment to another), stock conversion, account conversion ... often cause short-cut, work-around, extra transaction just to get the balance right ... Those work-around no doubt adds more "garbage"/confusion to the return of investment  number in my report.




    Monday, February 3, 2020 5:21 AM