Portfolio Comparison Performance Tool

[savory]

Hi,

I am trying to measure my year-to-year performance of my portfolio as well as cumulative. I understand there are lots of caveats that may result in a less than perfect comparison. Having said that, I still want to try something.

I would like to go back to 2009, actually July of 2009 and learn returns of a 60/40 and 70/30 total market portfolio returns. (in other words if I invested in a lazy fund, what would have been my return)

I did not make withdrawals or add funds except for dividends and interest which have been reinvested. To keep it apples to apples, I would like the comparison to be treated the same way in terms of dividends and interest.

It would be great if someone could guide me to a tool or an (easy) approach for how to do this analysis. Comments about why this is a good or bad idea for measuring my return is appreciated.

Thanks

 

[LOL!]

One way to do this is to use Morningstar.com to chart the "growth of $10,000" of a couple of 60/40 index funds of funds. Use ticker symbols
VSMGX (LifeStrategy Moderate Growth) and
VBIAX (Balanced Index)

One can change the dates charted to start in 2009, so this should take only a couple of minutes. Then please tell us what you learned. Thanks!

But that doesn't give you comparison to your own portfolio. To get that total return number, I suggest you download and install the free MS Money and enter ALL your transactions since 2009. It shouldn't be too hard given you only have re-invested distributions. MS Money can then give you your performance numbers using the exact same algorithm that morningstar.com uses, so you will get an apples-to-apples comparison.

 

[sonomaguy]

maybe something like portfoliovisualizer.com ?

 

[OldShooter]

To underline something @LOL! said, when benchmarking you have to be very careful to make sure that you are looking at total return.

There are two pieces to total return. First, the nominal performance of the benchmark. Period ending quote versus period beginning quote. Second, the dividends and interest that the benchmark paid during the period. It is this last bit that is often overlooked and it can be a large fraction of the total return. For example, the S&P 500 throws off IIRC something like 2.9% per year. Compounded over ten years that is a big chunk of change.

If you are neither taking out nor adding cash to a position and you are reinvesting all dividends and interest the calculation is easy: Total annual return is the nth root of the ratio of current value of the position to its original cost, where n is the number of years held. For example, for two years the annual rate of return is the square root of the ratio.

It amuses me that Quicken gets this wrong. When I get dividends that are reinvested, it treats the reinvestment as a new purchase and completely ignores the dividend when calculating my return on the security.

 

[gwraigty]

maybe something like portfoliovisualizer.com ?

+1

 

[pb4uski]

Hi,

I am trying to measure my year-to-year performance of my portfolio as well as cumulative. I understand there are lots of caveats that may result in a less than perfect comparison. Having said that, I still want to try something.

I would like to go back to 2009, actually July of 2009 and learn returns of a 60/40 and 70/30 total market portfolio returns. (in other words if I invested in a lazy fund, what would have been my return)

I did not make withdrawals or add funds except for dividends and interest which have been reinvested. To keep it apples to apples, I would like the comparison to be treated the same way in terms of dividends and interest.

It would be great if someone could guide me to a tool or an (easy) approach for how to do this analysis. Comments about why this is a good or bad idea for measuring my return is appreciated.

Thanks

I'd try this. https://www.portfoliovisualizer.com/backtest-portfolio#analysisResults

Next to the portfolio buttons there are dropdown for various pre-set portfolios (though you can further edit them as you wish).

The output includes cumulative and annual total returns with dividends reinvested.

 

[savory]

Thanks for the recommendation portfoliovisualizer.com. I am just beginning to play around with it but it looks like the right tool.

 

[target2019]

Create a portfolio at Morningstar. From what I recall, it does not reinvest dividends by default.

 

[VanWinkle]

Create a portfolio at Morningstar. From what I recall, it does not reinvest dividends by default.

This is true^^

 

[pb4uski]

Hi,

I am trying to measure my year-to-year performance of my portfolio as well as cumulative. I understand there are lots of caveats that may result in a less than perfect comparison. Having said that, I still want to try something.

I would like to go back to 2009, actually July of 2009 and learn returns of a 60/40 and 70/30 total market portfolio returns. (in other words if I invested in a lazy fund, what would have been my return)

I did not make withdrawals or add funds except for dividends and interest which have been reinvested. To keep it apples to apples, I would like the comparison to be treated the same way in terms of dividends and interest.

It would be great if someone could guide me to a tool or an (easy) approach for how to do this analysis. Comments about why this is a good or bad idea for measuring my return is appreciated.

Thanks

For your portfolio, since all is reinvested and no additions, then all you need to do is to use the rate function in Excel or LibreCalc.... Pmt would be nil and don't forget that PV (beginning value) is a negative. For other porolios, use Portfolio Visualizer.

(RATE(NPer; Pmt; PV; FV; Type; Guess)

NPer is the total number of periods, during which payments are made (payment period).

Pmt is the constant payment (annuity) paid during each period.

PV is the cash value in the sequence of payments.

FV (optional) is the future value, which is reached at the end of the periodic payments.

Type (optional) is the due date of the periodic payment, either at the beginning or at the end of a period.

Guess (optional) determines the estimated value of the interest with iterative calculation.