The PortfolioCenter help files say “for selected securities you can do performance calculations based on a transaction at the end of the day, rather than the beginning of the day. You can mark your mutual funds for end of day flows in order to get the most precise performance calculation.”

“Most precise”? That raises a few questions.  How is end of day different than the PortfolioCenter default?  How much more precise is end of day pricing?  How will changing to end of day pricing now affect historical performance returns?  I contacted the folks at Raleigh to find out.

What’s the difference?

Essentially, the main difference is in the day count for performance.  With end of day flows, there is one day less.

Assume you purchase Apple and Dell on 6/30.  For Apple you use beginning-of-day flows and for Dell you use end-of-day flows.  In terms of PortfolioCenter performance, the day count for the Apple is one day greater than the day count for the Dell.  If run the Position Performance Summary for 3/31 to 6/30, the report will show no return for the Dell because the security was held for zero days but it will show a slight return for Apple because it was held for one day.  This difference could affect the overall Internal Rate of Return, but it’s likely to be minimal change.

How will changing to end of day now affect the historical performance returns?

Changing the end of day flow will not affect past performance unless you process your intervals again, in which case, you will see a difference in the returns… though the difference will be very minimal.

Does the increased precision justify the processing time?

In other words, if making this switch means recomputing years worth of intervals for 100s of securities, portfolios and groups, is it worth it? Personally, the difference you’ll see in performance returns will be so minimal, I don’t think it justifies the time required to make the change.  However, if you are just starting with PortfolioCenter, it’s an option you might want to choose.

How do you mark securities for end of day flows?

First, you must first change it on the security type level and then in each security detail level.  Finally, if you have existing data, you need to re-run your interval calculations.

Got Questions?  We’ve got answers!

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