Calculating Your Rate of Return with the Modified Dietz Method

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In her debut video, Shannon explains how to calculate the Modified Dietz Method and the "Linked" Modified Dietz Method (and compares them to the money-weighted and time-weighted rates of return calculations from our previous videos).
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Опубликовано:

26 май 2021

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Комментарии : 22

@adbp473 3 года назад

I guess Justin saw the topic heading and gracefully handed it over to Shannon. Well done Shannon, I think Justin owes you a big drink. :-)

@JustinBenderCPM 3 года назад

@David Bateson - You have no idea! After filming the entire video over the course of an hour, I took a look at the footage, only to find that I hadn't focused the camera lens enough. We had to re-film the entire episode! (although it did make the wine taste that much better afterwards ;)

@nehachilwal401 2 года назад

Thank you so much for this video. I really understand the concept of Twrr Mwrr and modified Dietz from your video very easily explained with details.

@JustinBenderCPM 2 года назад

@Neha Chilwal - We're so glad you found the video helpful - thanks for watching! :)

@chrissydieb5839 3 года назад

Amazing - Thank you for the brilliant explanation! ☺️

@JustinBenderCPM 3 года назад

@Chrissy Dieb - You're very welcome (as you know, we created this video specifically for you! :)

@chrissydieb5839 3 года назад

@@JustinBenderCPM I appreciate that very much! And it was worth it. 😁 I‘m already looking forward to run the calculations. 😅 thank you again.

@charisc8437 2 года назад

Thank you so much. i just came across your channel. It's great information. re cashflow, if the portfolio (other than holding in ETF) has two cash accounts and i move $ from cash account no 1 to cash account no 2 within the portfolio to settle the purchase of ETF, do you consider this as cashflow in the return calculation? Thanks

@JustinBenderCPM 2 года назад

@Charis C - If cash account #1 and #2 are both part of your total portfolio value calculation, then you don't need to include the cash transfers between these accounts as new contributions/withdrawals (as they would net each other out).

@oscarmendezvalladares1644 Год назад

Great video! Thanks for the explanation. I have one doubt though that is making me a bit crazy. I am trying some examples of the Modified Dietz Method with my portfolios, and I've noticed that performance grows steadily every month even though I'm not really making gains. This is because one year ago I withdraw almost my whole account and left very little money in it, but the gains of that period continue make effect on the portfolio. The thing is, since the time period continiously grows, the effect of the weighted outflow that I did continiously have more effect (making the denominator smaller every month), resulting in having every month more returns even though my current portfolio value is not even changing. I am not sure if I'm explaining myself correctly, but I find this to be a big problem so I'd really appreciate it if you can help me understand why this happens and if something can be done about it.

@seideldaniel 2 года назад

Thank you for this excellent explanations! I have a question: If I calculate the twrr, the mwrr or the modified dietz for all of my individual assets in my portfolio (because I want see the performance of each of them) can I then add the weighted returns of each asset to get the overall portfolio return ?

@JustinBenderCPM 2 года назад

@Daniel S - This wouldn't likely work (as the weights wouldn't be constant in each security).

@seideldaniel 2 года назад

@@JustinBenderCPM So in this case I would have to do the modified dietz calculation on the portfolio level? And the combined buys/sells of the individual assets per month are the cashflows to consider like I did on the individual asset level?

@JustinBenderCPM 2 года назад

@@seideldaniel - Correct - you would also have to assume dividends that are not reinvested into the security are withdrawals from it.

@cajstretton 2 года назад

Has the YTD return been calculated correctly? Taking Gobe, 12.47%. If you take geometric mean of his returns, gives 0.98%. You can get 12.47% but its not been raised to power 1/n...

@JustinBenderCPM 2 года назад

@b.kiddo - The YTD return has been calculated correctly.

@johnsmith-ir1ne 3 года назад

does Shannon also work for PWL?

@JustinBenderCPM 3 года назад

@john smith - She sure does! Shannon has been with PWL for over 10 years (as a Portfolio Manager and Financial Planner).

@KarlDag 3 года назад

Says so in the fist minute...

@apothe6 3 года назад

Why does PWL Capital do so much for the ordinary investor?

@JustinBenderCPM 3 года назад

@apothe6 - We've always enjoyed helping other investors, even if they're not clients of PWL (we've been doing it for over a decade, and don't expect to stop anytime soon :)