What is the basis for this? I can calculate things like internal rate of return in Excel but what are the advantages/reasons for the "unitisation" approach?
Regards
Monabri
next question would be - can anyone provide a simple example of the process
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monabri wrote:I've seen several HYPers making reference to "they've unitised their portfolio" (or words to that effect) to assess it's performance.
What is the basis for this? I can calculate things like internal rate of return in Excel but what are the advantages/reasons for the "unitisation" approach?
Regards
Monabri
next question would be - can anyone provide a simple example of the process
monabri wrote:I've seen several HYPers making reference to "they've unitised their portfolio" (or words to that effect) to assess it's performance.
What is the basis for this? I can calculate things like internal rate of return in Excel but what are the advantages/reasons for the "unitisation" approach?
Regards
Monabri
next question would be - can anyone provide a simple example of the process
vrdiver wrote:Unitization allows two different portfolios, constructed over different time periods to be compared.
Alaric wrote:vrdiver wrote:Unitization allows two different portfolios, constructed over different time periods to be compared.
To coin a phrase, you could also try "with profitisation" . What you do is accumulate all new money in and money withdrawn at a target rate of return. If the current portfolio value exceeds the target accumulated value, you congratulate yourself on a final bonus. If it's under the target, you deem the loss a "market value adjuster".
Provided you have the dates of all cash flows in and out, it's probably marginally simpler to construct than unitisation.
Alaric wrote:vrdiver wrote:,,,
Provided you have the dates of all cash flows in and out, it's probably marginally simpler to construct than unitisation.
JMN2 wrote:Alaric wrote:vrdiver wrote:,,,
Provided you have the dates of all cash flows in and out, it's probably marginally simpler to construct than unitisation.
Well it must be very simple then because unitisation is just a simple spreadsheet with a couple of columns. When constructing historical number of unit changes an assumption I made was, as I had portfolio values for certain dates, to calculate a time-weighted linear intrapolation for any dates money was going in/out.
Now on my spreadsheet the final row is live and picks up current portfolio value and thus unit price. Any in or outflows that live row becomes static, unit change being calculated using the end of day value, and then I'll add another live row again to show live unit price.
I started 31/12/2009 with a price of 100, first 2-3 years my portfolio was very different from now, then I got more into HYPing, closed portfolio, then 2015 I started putting in new money (so my units have increased in number), no money taken out yet, unit value today is 161.98, xirr 6.88 live to date.
JMN2 wrote:Briefly, say you start a year with £100 and subscribe new money for £50 and the market doesn't move at all. You now have £150,unitisation adjusts things so you don't end up showing 50% return incorrectly.
Now on my spreadsheet the final row is live and picks up current portfolio value and thus unit price.
monabri wrote:Thanks for the replies - I'm now "unitised" as of 31/03/17! I just decided to take my portfolio as on this date and unitise it.
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doug2500 wrote:Would you use accumulation or income? Income seems most appropriate for my non-ISA accounts which pay dividends into my bank while accumulation sounds best for my ISA's which hold income within them.
If I have holdings with a small number of brokers and fund houses as well as certificates would it mean valuing all of them every time I took some action? Alternatively do people just track every account or 'portfolio' separately? And can you then aggregate them somehow?
At the end of the day if I get a XIRR of 20% and a FTSE TR index is up 10% I'm happy, even though it's not a straight comparison. A bit amateurish I admit, hence my interest.
Would you use accumulation or income? Income seems most appropriate for my non-ISA accounts which pay dividends into my bank while accumulation sounds best for my ISA's which hold income within them.
Very much depends on what you do with your dividends. I am drawing income from my HYP, so Income Units are more appropriate. There's nothing to stop you calculating both though, remember that drawing income means 'selling' some of your Accumulation Units.
If I have holdings with a small number of brokers and fund houses as well as certificates would it mean valuing all of them every time I took some action? Alternatively do people just track every account or 'portfolio' separately? And can you then aggregate them somehow?So do I. My HYP is spread across some certificates, several ISAs and non-ISA accounts. Indeed, some of my holdings are in more than one of them. Yes, you have to do a valuation each time it's needed, but I have all my holdings listed in a single spreadsheet (consolidating the various accounts before unitising it as a single entity) so that's relatively straight forward.
At the end of the day if I get a XIRR of 20% and a FTSE TR index is up 10% I'm happy, even though it's not a straight comparison. A bit amateurish I admit, hence my interest.
No, not amateurish. XIRR is a different tool with different objectives. It measures your own personal investment performance. But being dependent on your own timing choices it's not something you can easily compare with other investors, or benchmarks.
doug2500 wrote:Would you use accumulation or income? Income seems most appropriate for my non-ISA accounts which pay dividends into my bank while accumulation sounds best for my ISA's which hold income within them. Would this be a normal approach?
If I have holdings with a small number of brokers and fund houses as well as certificates would it mean valuing all of them every time I took some action? Alternatively do people just track every account or 'portfolio' separately? And can you then aggregate them somehow?
doug2500 wrote:Would you use accumulation or income? Income seems most appropriate for my non-ISA accounts which pay dividends into my bank while accumulation sounds best for my ISA's which hold income within them. Would this be a normal approach?
doug2500 wrote:If I have holdings with a small number of brokers and fund houses as well as certificates would it mean valuing all of them every time I took some action? Alternatively do people just track every account or 'portfolio' separately? ...
doug2500 wrote:... And can you then aggregate them somehow?
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