Reader LA sent the following comment about a major weakness of online brokers - the absence of portfolio performance analysis tools.
It seems to me it would be a simple matter for a brokerage firm to include analysis tools on their websites since all the data is already in their computers.
In order to get this portfolio analysis I am a member of Globe Investor Gold, which requires me to re-enter my data. This is a pain.
One major weakness of the Globe Investor Gold portfolio package is the way it handles $US transactions. It uses the current exchange rate, for all calculations despite the fact you may have purchased $US securities at a number of different times at different exchange rates. This flaw make the return analysis on $US investments useless.
All the discount brokers I am familiar with (RBC Direct, TD Waterhouse and E*Trade) offer nothing more than the book value and current value of holdings. It is surprising that a discount broker would not offer sophisticated performance analysis tools to differentiate their product from the competition.
Personally, I use Microsoft Money for portfolio analysis despite its quirks in dealing with US equities in taxable portfolios. I make 3 or 4 transactions per month, so it is not hard to enter the data. I would have to enter the data anyways because I have accounts with different institutions (RESP with TD Mutual funds, Group RRSP through my employer etc.) and would like to view everything as one big portfolio. Still, performance analysis is on my wish list for brokerage and mutual fund accounts.
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11 responses so far ↓
1 0xCC // Jul 24, 2007 at 8:24 am
BMO’s Investorline offers some very basic performance data (by year, month and quarter I think) but it is on the whole portfolio and it isn’t obvious to me how they handle US dollar holdings.
2 MillionDollarJourney.com // Jul 24, 2007 at 9:45 am
CIBC does the same thing, book value and market value. I also use an external metric for measuring performance through MS Money.
3 Joe // Jul 24, 2007 at 10:19 am
Why bother with performance analysis? If you stick with a simple indexing investment/ periodic rebalancing approach - you need to know what your returns are..
Obtaining accurate performance metrics only encourages the mindset of chasing returns..
4 Joe // Jul 24, 2007 at 10:20 am
That should read :
If you stick with a simple indexing investment/ periodic rebalancing approach - you DON’T need to know what your returns are..
5 Canadian Capitalist // Jul 24, 2007 at 10:37 am
Joe: Very good point. I track returns now only because I am not fully indexed yet (around 50%). In the future, I might still track returns simply because I am curious about returns.
If portfolio performance is available, it might show many people how well (or poorly) they are doing and might convince them of the merits of indexing. Of course, it will also show how bad most mutual funds are!
6 willfly // Jul 24, 2007 at 11:26 am
I used scottrade earlier and they integrated GainsKeeper; probably best portfolio view I have seen with discount brokerages.
7 FourPillars // Jul 24, 2007 at 1:03 pm
Joe - I don’t see the correlation between knowing your investment portfolio performance and chasing returns.
I also think that if you are planning for retirement that knowing your returns is important information so that you can track how your progress is coming along. For example if you make the assumption that your portfolio returns will be 7% and after 10 years, you are only averaging 4% then you might have to look at your plan again.
It’s also a good indicator of the volatility of your portfolio - if you are a conservative investor and your portfolio goes up 30% in one year then that might be a clue that you have a riskier portfolio than you planned.
I think if you are just starting out and your contributions outway the investment returns in a typical year, then the performance may not matter as much.
Mike
8 Larry Anderson // Jul 24, 2007 at 6:03 pm
Why do I want investment portfolio analysis?
I like to measure my results and compare them to my plan. It inspires me to keep the discipline like a runner who tracks his course times.
I manage six portfolio’s: my wife’s RRSP, my wife’s Spousal RRSP, my wife’s LIRA RRSP (she retired and received a pension payout), my RRSP, my wife’s non-registered portfolio and my non-registered portfolio.
I’ve been managing these portfolio’s since my wife and I married in 1975 (very small accounts), long before the advent of index funds, ETF’s or even the internet. Investment research was conducted Saturday mornings at the Public library.
My wife and I started with nothing and long ago achieved financial independence from a disciplined approach to savings and a prudent investment strategy. This is not to infer I haven’t made mistakes. The mistakes I’ve made are what helped me develop a prudent investment strategy.
I do not chase returns. I do not overtrade. I minimize costs and taxes. I do my homework.
And yes, perhaps as a matter of weakness, I like to check my score.
9 Joe // Jul 25, 2007 at 10:40 am
FourPillars - I’m not saying it necessarily hurts to know your returns - but it does encourage a “chase the best returns mindset”.
Your portfolio is what your portfolio is. Knowing that it returned 4% or 7% historically doesn’t change what you do in the future (as past performance is not indicative of future returns, blah blah blah)
The only reason I can think of for using a performance metric is to compare it to other metrics. If you make changes based on past performance, you are over analyzing and aren’t following the spirit of the prevelant investing wisdom..
10 FourPillars // Jul 25, 2007 at 11:37 pm
Joe, I’ll definitely concede that knowing your portfolio performance is not one of life’s more important duties however I think it’s good information.
You haven’t really given any proof/reason why knowing your portfolio returns will encourage return chasing. When you are driving a car, does knowing how fast the car is going make you want to drive faster?
Mike
11 Joe // Jul 26, 2007 at 1:46 pm
No, you’re right - it doesn’t hurt to know and it is kind of interesting - it comes down to self discipline, I guess.
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