The financial industry revolves around performance. How well did you do? How do you measure against your peers? So how do you make sure that the performance you determined is accurate and reflective of what occurred? The answer is in the transactions!
Almost every transaction you post is going to influence your performance in one way or another. When an event occurs, sometimes it can be unclear what is the best way to post, so the system can calculate performance accurately. Here is a rundown of how each transaction will impact the performance calculation and where it will show on a performance report.
Just a reminder, so we all can follow along - When running a performance report (IRR) in the system, you have the option of using the DCF method (Discounted Cash Flow) or the ACB method (Average Capital Base). With Performance History (TWR), the system only uses ACB. When you update performance, the system calculates the IRR’s based on ACB and then stores the performance numbers in the performance files – either by net (.prf) or by gross (.pbf). Since DCF is not applicable for the Performance History numbers, this is only going to cover the ACB method.
As we all (should) know, ACB IRR is total profit over Average Capital Base. Your Average Capital Base is the Beginning MV + (Each Change in capital * (days left in period/total days in period)). The total profit is the sum of dividends, interest, realized gain, unrealized gain, change in accrued interest and if you select net of fees, management and portfolio fees.
All information is based on positive trade amounts. Posting a negative will result in a contribution showing as a withdrawal and vice versa.
NET OF FEES:
Expense/Fee | posted to 'ca' | posted to 'aw' | |
ep manfee' | management fees | management fees paid by client | fees |
ep' not 'manfee' | portfolio fees | portfolio fees paid by client | fees |
GROSS OF FEES:
Expense/Fee | posted to 'ca' | posted to 'aw' | |
ep manfee' | withdrawals | ACB | does not show, does not effect performance |
ep' not 'manfee' | withdrawals | ACB | does not show, does not effect performance |
Tran Code | posted to 'ca' | posted to 'aw' | ACB IRR Calc | Perf C/W Set to 'n' | |
pa | interest | total profit | interest/contributions | total profit and ACB | N/A |
sa | interest | total profit | interest/withdrawals | total profit and ACB | N/A |
ac | unrealized gain | total profit | withdrawals | total profit and ACB | N/A |
as | unrealized gain | total profit | contributions | total profit and ACB | N/A |
by | unrealized gain | total profit | contributions | total profit and ACB | N/A |
ss | unrealized gain | total profit | withdrawals | total profit and ACB | N/A |
sl | realized gain | total profit | withdrawals/unrealized gains | total profit and ACB | N/A |
cs | realized gain | total profit | contribution | total profit and ACB | N/A |
li | contributions/unrealized gains | total profit and ACB | N/A | not shown in cont - still in total profit and ACB | |
si | withdrawals/unrealized gains | total profit and ACB | N/A | not shown in with - still in total profit and ACB | |
lo | withdrawals/unrealized gains | total profit and ACB | N/A | not shown in with - still in total profit and ACB | |
so | contributions/unrealized gains | total profit and ACB | N/A | not shown in cont - still in total profit and ACB | |
dv | dividends | total profit | dividends/withdrawals | total profit and ACB | N/A |
dr | dividends | total profit | dividends/withdrawals | total profit and ACB | N/A |
in | interest | total profit | interest/withdrawals | total profit and ACB | N/A |
ai | interest | total profit | interest/contributions | total profit and ACB | N/A |
ir | interest | total profit | interest/withdrawals | total profit and ACB | N/A |
pd | realized gain | total profit | withdrawal | total profit and ACB | N/A |
ps | realized gain | total profit | contributions | total profit and ACB | N/A |
ti | transfers in/unrealized gains | total profit and ACB | N/A | N/A | |
ts | transfers out/unrealized gains | total profit and ACB | N/A | N/A | |
to | transfers out/unrealized gains | total profit and ACB | N/A | N/A | |
tr | transfers in/unrealized gains | total profit and ACB | N/A | N/A | |
rc | unrealized gain | total profit | withdrawals | total profit and ACB | |
rs | unrealized gain | total profit | contributions | total profit and ACB | |
wd 'ca' | N/A | N/A | withdrawals | ACB | |
dp 'ca' | N/A | N/A | contributions | ACB | |
dp ‘ex’ | Withdrawals | ACB | N/A |