XIRR vs Unitized total return = Ratio?

george4064

tebbins said:

Aceace said:

Vanguard's "Personal rate of return" is a total return since one started investing, so not annualised. 

I would have thought from Vanguard's description as an internal *rate* of return that it was annualised. I suppose the only way to know for sure is to calculate it myself based on my cashflows.

Aceace said:

tebbins said:

Aceace said:

Vanguard's "Personal rate of return" is a total return since one started investing, so not annualised. 

I would have thought from Vanguard's description as an internal *rate* of return that it was annualised. I suppose the only way to know for sure is to calculate it myself based on my cashflows.

It's definitely not annualised. As I said above, I have an account where they quote a personalrate of return of 33%. It's a simple account with one deposit and no withdrawls. The currently stated value is 33% more than the deposit over 3 years ago. My calculated XIRR (actually, Google Sheet's calculated XIRR) is 9.3%, which is clearly an annualised return. 

For the record, I calculated the XIRR for my OH’s Vanguard ISA. Then I calculated that figure up to show the ‘total XIRR’ since inception of when she first invested and that figure pretty much bang on matched the ‘personal rate of return’ shown on the Vanguard website.

tebbins

george4064 said:

tebbins said:

Aceace said:

Vanguard's "Personal rate of return" is a total return since one started investing, so not annualised. 

I would have thought from Vanguard's description as an internal *rate* of return that it was annualised. I suppose the only way to know for sure is to calculate it myself based on my cashflows.

Aceace said:

tebbins said:

Aceace said:

Vanguard's "Personal rate of return" is a total return since one started investing, so not annualised. 

I would have thought from Vanguard's description as an internal *rate* of return that it was annualised. I suppose the only way to know for sure is to calculate it myself based on my cashflows.

It's definitely not annualised. As I said above, I have an account where they quote a personalrate of return of 33%. It's a simple account with one deposit and no withdrawls. The currently stated value is 33% more than the deposit over 3 years ago. My calculated XIRR (actually, Google Sheet's calculated XIRR) is 9.3%, which is clearly an annualised return. 

For the record, I calculated the XIRR for my OH’s Vanguard ISA. Then I calculated that figure up to show the ‘total XIRR’ since inception of when she first invested and that figure pretty much bang on matched the ‘personal rate of return’ shown on the Vanguard website.

That's surprising since XIRR is time-weighted, but it's the time-weighted return that your actual portfolio has actually achieved... Hm... Any slight discrepancy may be down to account fees.
So then Vanguard's figure is annualised unless this is some extraordinary coincidence.

Edit sorry I meant money-weighted, it's been ages since I learned this.

george4064

tebbins said:

george4064 said:

tebbins said:

Aceace said:

Vanguard's "Personal rate of return" is a total return since one started investing, so not annualised. 

I would have thought from Vanguard's description as an internal *rate* of return that it was annualised. I suppose the only way to know for sure is to calculate it myself based on my cashflows.

Aceace said:

tebbins said:

Aceace said:

Vanguard's "Personal rate of return" is a total return since one started investing, so not annualised. 

I would have thought from Vanguard's description as an internal *rate* of return that it was annualised. I suppose the only way to know for sure is to calculate it myself based on my cashflows.

It's definitely not annualised. As I said above, I have an account where they quote a personalrate of return of 33%. It's a simple account with one deposit and no withdrawls. The currently stated value is 33% more than the deposit over 3 years ago. My calculated XIRR (actually, Google Sheet's calculated XIRR) is 9.3%, which is clearly an annualised return. 

For the record, I calculated the XIRR for my OH’s Vanguard ISA. Then I calculated that figure up to show the ‘total XIRR’ since inception of when she first invested and that figure pretty much bang on matched the ‘personal rate of return’ shown on the Vanguard website.

That's surprising since XIRR is time-weighted, but it's the time-weighted return that your actual portfolio has actually achieved... Hm... Any slight discrepancy may be down to account fees.
So then Vanguard's figure is annualised unless this is some extraordinary coincidence.

It’s money-weighted, Google the formula and you will see. Inputs are dates and cashflows.

XIRR is same as IRR, except that XIRR allows you to state when cashflows were made in each period (1 year) whereas IRR just rolls all cashflows into each year end.

Aceace

tebbins said:

george4064 said:

tebbins said:

Aceace said:

Vanguard's "Personal rate of return" is a total return since one started investing, so not annualised. 

I would have thought from Vanguard's description as an internal *rate* of return that it was annualised. I suppose the only way to know for sure is to calculate it myself based on my cashflows.

Aceace said:

tebbins said:

Aceace said:

Vanguard's "Personal rate of return" is a total return since one started investing, so not annualised. 

I would have thought from Vanguard's description as an internal *rate* of return that it was annualised. I suppose the only way to know for sure is to calculate it myself based on my cashflows.

It's definitely not annualised. As I said above, I have an account where they quote a personalrate of return of 33%. It's a simple account with one deposit and no withdrawls. The currently stated value is 33% more than the deposit over 3 years ago. My calculated XIRR (actually, Google Sheet's calculated XIRR) is 9.3%, which is clearly an annualised return. 

For the record, I calculated the XIRR for my OH’s Vanguard ISA. Then I calculated that figure up to show the ‘total XIRR’ since inception of when she first invested and that figure pretty much bang on matched the ‘personal rate of return’ shown on the Vanguard website.

That's surprising since XIRR is time-weighted, but it's the time-weighted return that your actual portfolio has actually achieved... Hm... Any slight discrepancy may be down to account fees.
So then Vanguard's figure is annualised unless this is some extraordinary coincidence.

Edit sorry I meant money-weighted, it's been ages since I learned this.

Sorry, but Vanguard's stated Personal Rate of Return is definitely not annualised. 

A very simple example of an actual account I am managing:

Deposit £5k at the end of June 2018,  no further deposits or withdrawals.

Current value £6,670.51.

Vanguard's stated Personal Rate of Return 33.35%.

This is clearly a total return (not annualised) I.e. £5,000 * 1.3335 = £6,667.50 (note that the very slight discrepancy will be due to some minor fees of about £3).

If this were an annualised return then the current value would be roughly £5,000 * (1.3335^3.16667) = £12,438.89. 

tebbins

Aceace said:

tebbins said:

george4064 said:

tebbins said:

Aceace said:

Vanguard's "Personal rate of return" is a total return since one started investing, so not annualised. 

I would have thought from Vanguard's description as an internal *rate* of return that it was annualised. I suppose the only way to know for sure is to calculate it myself based on my cashflows.

Aceace said:

tebbins said:

Aceace said:

Vanguard's "Personal rate of return" is a total return since one started investing, so not annualised. 

I would have thought from Vanguard's description as an internal *rate* of return that it was annualised. I suppose the only way to know for sure is to calculate it myself based on my cashflows.

It's definitely not annualised. As I said above, I have an account where they quote a personalrate of return of 33%. It's a simple account with one deposit and no withdrawls. The currently stated value is 33% more than the deposit over 3 years ago. My calculated XIRR (actually, Google Sheet's calculated XIRR) is 9.3%, which is clearly an annualised return. 

For the record, I calculated the XIRR for my OH’s Vanguard ISA. Then I calculated that figure up to show the ‘total XIRR’ since inception of when she first invested and that figure pretty much bang on matched the ‘personal rate of return’ shown on the Vanguard website.

That's surprising since XIRR is time-weighted, but it's the time-weighted return that your actual portfolio has actually achieved... Hm... Any slight discrepancy may be down to account fees.
So then Vanguard's figure is annualised unless this is some extraordinary coincidence.

Edit sorry I meant money-weighted, it's been ages since I learned this.

Sorry, but Vanguard's stated Personal Rate of Return is definitely not annualised. 

A very simple example of an actual account I am managing:

Deposit £5k at the end of June 2018,  no further deposits or withdrawals.

Current value £6,670.51.

Vanguard's stated Personal Rate of Return 33.35%.

This is clearly a total return (not annualised) I.e. £5,000 * 1.3335 = £6,667.50 (note that the very slight discrepancy will be due to some minor fees of about £3).

If this were an annualised return then the current value would be roughly £5,000 * (1.3335^3.16667) = £12,438.89. 

Since you have only made one deposit so far I wouldn't expect to see a difference. Mine is different, my deposits since I opened total £23,876.67, current value £29,454.01, a total return to date of 23.36%, the website quotes 54.56%, so it must be using a money-weighted rate of return formula, whereas the formula you use is a simple current value / deposits = total return to date. Perhaps for accounts less than a year, or with only one deposit so far, Vanguard would tell the site to use a basic total return formula rather than MWRR.

Anyway, it hardly matters, have a nice day