The Performance Inception date is the date from which PortfolioCenter begins measuring performance for a particular account. If you want accurate performance returns, this date must be correct. Fortunately, you can let PortfolioCenter set this date automatically.
For accurate returns, the Performance Inception date should be one of three dates:
1. The day before the first transaction
This is the date PortfolioCenter will choose if you let it. It is also your best bet for avoiding performance problems and producing the most accurate returns.
You should use the day before the first transaction for new portfolios when the initial transactions are “flow” transactions such as deposits and receipts of securities.
On performance reports, the beginning portfolio value will be zero, the value of the assets will be “flow” into the account and performance will be measured going forward based on the flow amount.
2. The day of the first transaction
If your initial transactions are “non-flow” transaction such as journals, credits or buys to none, you would use this option.
On performance reports, the beginning portfolio value will equal the value of the assets at the close of day, and performance will be measured from this day forward.
The danger in this method is PortfolioCenter treats “non-flow” transactions as capital gains, which could skew performance if the position is large enough.
3. Any day after the first transaction
You would choose this option if you and your client agree not to measure performance until your investment plan is in place. Or you might also use this option if the account was emptied and later re-funded.
Like option 2, the beginning value equals the value of the assets at the close of the date you select, with performance measured performance from that day forward.
If you use this option, I highly recommend that you choose an end of month date or consult a PortfolioCenter expert to ensure you are not skewing performance returns.Questions?