India Fund Performance Compared to Index -Sensex(in %)
* move mouse over the graph to view data on any particular date.
[+-] Asset Allocation Chart

* Beta version, started on Jan/2010 as an trial. Currently contains very limited data. Read more about this chart in the post

Thursday, May 21, 2009

Track Your Portfolio Performance.

It is important to calculate and track portfolio performance accurately. Most often the performance is assumed based on few stocks or transactions and not based on the portfolio as a whole. The portfolio tools available on different sites like Yahoo finance or brokers provide a snapshot of your portfolio at any given time and does not provide ability to track the history. It also does not take into consideration how much money you added or withdrawn during a period and its effect on the numbers.

The information Portfolio Tracker provides (which I am discussing here) is crucial in understanding if the time we spend picking our own stocks and the risk we are incurring doing so is worth or not. You can easily look at how a low cost index fund would have performed during the same period versus your own fund. It also provides information on how your portfolio performed at any given point in past. Once you have the data in this format, you can use to present it in any formats e.g. Charts.

I have been using this simple method to track my portfolio performance since last 2 years.

Highlights:
- The portfolio is tracked similar to Mutual Funds, which are based on units.
- You can keep using the existing portfolio tools (from your broker or free). No need to track individual stock transactions like purchase or sale of stocks in the tracker.
- You can decide on the frequency of updating the tracker. I update it every weekend, once every month also works. It takes only around 5 mins of your time everytime you update it.
- All you need is an Excel like spread sheet. I use Google Docs, as it allows me to access the data from anywhere. It has almost all the features including charts and works like Excel. Charts are similar to what you see in Google Finance.
- Flexible and customizable according to your own needs. We could even added other investments like fixed deposit or bonds while calculating the total portfolio value. These values may not change every week, but adding it helps calculate accurate value of your portfolio.
- Provides data on how the fund performed during any of the previous weeks or months. With current fund price, users can look for the index values and portfolio totals which corresponds to same unit price in the past.
- Ability to add multiple investors and track their investments in the portfolio. Run your own fund!
- Dividends received will get added to cash holdings and thus be part of the portfolio calculations.

Screenshot:



** Each row represent one week data and items marked in green are the only items needs to be entered manually.

Entry Types:
- Status: Weekly status of portfolio
- Purchase: New Money Addition
- Withdraw: Withdrawal of money.
*again, there are not individual transactions of shares.

Sample portfolio tracking sheet:
View as web page: http://spreadsheets.google.com/pub?key=rdBrHqAaLFO17KYydJj79iA&single=true&gid=12&output=html

View and copy as Google spreadsheet: http://spreadsheets.google.com/ccc?key=rTWMVyD677ubsd1VG8bli9Q

Download as excel sheet: Sample Portfolio Performance Tracker

Send me an email or add a comment with email id if you have trouble accessing or getting a copy of the spreadsheet or if you have any questions regarding the post.

Steps:
1. Add total portfolio and cash position and divide it by an arbitrary number (initial unit price) like 10 or 100. This gives the number of units. At this point we have the total portfolio value, unit price and number of units or shares. What are the critical values in the spreadsheet. Later when you add or withdraw money, you are adding units or reducing the number of units and the unit price will remain same.
2. Choose an interval to update the document. e.g weekly once.
3. Update the portfolio value and cash positions along with indexes values.
4. If there is addition of new money or withdrawal of money, update the document by marking it.
5. Use this information while making investment decisions.

This is a simple but very effective way to see how your investments are doing compared to benchmark like stock market indexes. The graphs on this site is generated based on this calculations.

7 comments:

Jae Jun said...

Thank you for this. Finally found what I was looking for. I did make some changes since I don't run a mutual fund but it works great.

George said...

Hi Jae,

Happy New Year!!

Thanks for the comments. I have been using the portfolio tool for past 3 years and its very easy and effective. As you mentioned, there are few things which are optional. I added it because I want to have the ability to track multiple investors.

I am a regular reader of your site www.oldschoolvalue.com, Its one of the best site i have even seen. I also use your spreadsheet, it helps with the evaluation. Thanks for all the good work.

Regards,
George.

Anonymous said...

this is rather interesting. and may hit the mark on what i want to do and being simple. if tracking becomes complicated, i am sure i will lose the habit.

at first i was a little confused as to how this will work. but as i thought more about it, this seems to be a beautiful approach to overall measurement of performance of funds i manage (my family's).

am inspired enough to ask as to how you track the performance of those individual stocks which have good dividend yield - typically brokerages fail to attribute div yield value to the stock (at least mine only shows me how i am doing on the price of the stock since it was acquired).

- sims

George said...

Hi,

Sorry for the delay, was tied up with work and exams.

Glad that you found it interesting. Despite the looks, as you mentioned it is very easy to follow :-).

You raised a good point, I havent seen any brokerage tools which automatically takes the dividend income into account while calculating performance. But you have good news!! By using the portfolio tool discussed here, you actually account for the dividend income also, without we doing anything!! Once we receive the dividend income, it comes to the account attached to the trading account and will be added to the existing cash. And while we add the data to our portfolio tool at regular interval, we take that as part of the "cash". So, indirectly dividend income is added to our portfolio calculation. Hope this helps. Please let me know if you have questions or suggestions.

Thanks,
George

Anonymous said...

yes, your comment about how dividends can be accounted for at a portfolio level makes sense.

i was asking a related question, as to what approach, if any, you might use to track returns on a dividend heavy stock - where measuring only price appreciation does not do justice.

George said...

I havent seen an existing tool which takes dividends into consideration for stock performance calculations.

Are you using any existing portfolio tool to track the inidividual stocks? If yes, we will have to use some work arounds like reducing the amount of dividend received from purchase price. While it is not perfect, this should give a better picture about performance for dividend heavy shares.

But if you are have flexibility on how the performance is calculated, there may be better ways to do it.

Let me know if that helps. Meanwhile, I will check if i can find a better way.

Peter Kadish said...

There are many options if your portfolio is very simple. But long term analysis of portfolio performance is a problem if you trade different asset classes or have long/short positions as well as trade foreign stocks and want to see detailed statistics of your portfolio. Google finance is the best I have seen. Beatthebenchmark.net very good as well. I think that there is even more analysis available than in google.