Advanced Portfolio Income (maybe Brokerage Fees too) incorrect in switch and multiple investments transactions

Chris Good chris.good at ozemail.com.au
Fri Dec 30 19:14:23 EST 2016


> -----Original Message-----
> From: Alberto Dante [mailto:alberto.dante at gmail.com]
> Sent: Thursday, 22 December 2016 4:32 AM
> To: Chris Good <chris.good at ozemail.com.au>; gnucash-user at gnucash.org
> Subject: Re: Advanced Portfolio Income (maybe Brokerage Fees too)
> incorrect in switch and multiple investments transactions
> 
> On 21/12/2016 02:28, Chris Good wrote:
> >> Message: 12
> >> Date: Tue, 20 Dec 2016 11:45:32 +0100
> >> From: Alberto Dante <alberto.dante at gmail.com>
> >> To: gnucash-user at gnucash.org
> >> Subject: Advanced Portfolio Income (maybe Brokerage Fees too)
> >> 	incorrect in switch and multiple investments transactions
> >> Message-ID: <691053c2-2ebc-b2de-9cdd-f0c5ed915872 at gmail.com>
> >> Content-Type: text/plain; charset=utf-8; format=flowed
> >>
> >> First of all, note that I've put all my investment operations (fee,
> >> capital gain, dividend, ...) into Income accounts (Income:Finance:...),
> >> so I can have the net finance balance directly, and I can compare
> >> different types of Income (Job, Finance, ...) in a glance.
> >> Simply, my account tree is something like that:
> >>
> >> Assets
> >>           Current Assets
> >>                   Cash
> >>                   Checking
> >>                           Bank ABC
> >>           Investment
> >>                   Broker DEF
> >>                           Mutual Fund
> >>                                   FUND 1
> >>                                   FUND 2
> >>                                   FUND 3
> >>                                   FUND 4 Income
> >>           Job
> >>                   ........
> >>           Finance
> >>                   Investment
> >>                           Broker DEF
> >>                                   Mutual Fund
> >>                                           FUND 1
> >>                                                   Capital gain
> >>                                                   Dividend
> >>                                                   Fee / Commission
> >>                                           FUND 2
> >>                                                   ......
> >>                                           FUND 3
> >>                                                   ......
> >>                                           FUND 4
> >>                                                   ......
> >>
> >> Therefore, in Advanced Portfolio report I have not-zero values only
> >> in Income column, while Brokerage Fees column has all zero values.
> >> So I couldn't check Brokerage Fees column values in Advanced
> >> Portfolio, but I
> >> think it would be affected by the same problem.
> >> I've found two situations causes incorrect Income column values in
> > Advanced Portfolio Report:
> >> 1) Switch Investments
> >>
> >> When switching e.g. from FUND 1 (sell) to FUND 2 (buy) (without
> >> involving Bank ABC account), generally you have to pay fees (e.g.
> >> 5,00
> >> Euro) charged to FUND 2, while FUND 1 doesn't have any fee (sell is
> >> for free); total fee = 5,00 Euro.
> >> In this case Advanced Portfolio income column charges 5,00 Euro both
> >> to FUND 1 and FUND 2; total fee = 10,00 Euro.
> >>
> >> 2) Multiple Investments
> >>
> >> With just one operation (one transfer from Bank ABC account) you buy
> >> two funds FUND 3 and FUND 4, paying 8,00 Euro fee each; total fee =
> >> 16,00 Euro.
> >> In this case Advanced Portfolio income column charges 16,00 Euro both
> >> to FUND 1 and FUND 2; total fee = 32,00 Euro.
> >>
> >> Please note that all totals in account tree (mainly
> >> Income:Finance:...) are always correct; other column values in 
> >> Advanced Portfolio report seems to be correct too.
> >>
> >> Moreover:
> >> - Basis column how is calculated (when, after multiple buy
> >> operations, you have a total sell and a new buy again)? Does Advanced
> >> Portfolio recognize the total sell before the last buy?
> >> - I calculate capital gain manually; how is it possible to find it
> >> automatically?
> >> Realized gain column does it already or uses my manually calculated
> > values?
> >> Thanks, Alberto
> >>
> > Hi Alberto,
> >
> > Just so people know what has already been suggested in bug 776300 [1]:
> >
> > Comment 1 from Chris Good:
> >
> > It sounds like you are putting multiple splits for different stock (or
> > mutual
> > fund) accounts in the 1 transaction. Advanced Portfolio Report is not
> > designed to handle that. It would be very complicated to handle that
> > sort of transaction. Put them in separate transactions even if they
> > didn't happen like that. For item 1 you'll have to do a dummy in/out
> > of the bank or brokerage account (or some other account). Please let
> > us know if the commission is still a problem after you do that.
> >
> > Note that if you enter splits for fees (or commissions) you will have
> > to manually calculate capital gains rather than using lots for the
> > automatic calculation and creation of capital gain transactions. This
> > is more work but perfectly valid.
> >
> > If your jurisdiction allows you to deduct fees and you wish to use
> > automatic calculation of capital gains, you must enter net prices
> > (less fees) on the stock splits and must not enter splits for the fees.
> > I am currently documenting this. This means it is not easy to track fees
> > in specific accounts but this is how it currently is.
> >
> > In future, you might like to discuss this sort of thing in the
> > gnucash-user email group before you go to the trouble of raising a bug.
> >
> > Comment 3 from Chris Good:
> >
> > I forgot to say, interesting idea making your fees income accounts. I
> > assume the report will not recognize any brokerage as it expects them
> > to be expenses.
> >
> > Comment 4 from Alberto Dante:
> >
> > I'm thinking about creating a dummy account:
> >
> > Assets:Current Assets:Checking Account:DUMMY BANK
> >
> > (which total must be always zero) to use as intermediate step between:
> >
> > 1) To manage switch investment operations:
> >
> > Assets:Investments:Broker DEF:Mutual Fund:FUND 1 Assets:Current
> > Assets:Checking Account:DUMMY BANK Assets:Investments:Broker
> > DEF:Mutual Fund:FUND 2
> >
> > Assets:Investments:Broker DEF:Mutual Fund:FUND 3 Assets:Current
> > Assets:Checking Account:DUMMY BANK Assets:Investments:Broker
> > DEF:Mutual Fund:FUND 4
> >
> >
> > 2) To manage multiple investment operations:
> >
> > Assets:Current Assets:Checking Account:BANK ABC
> >
> > Assets:Current Assets:Checking Account:DUMMY BANK
> >
> > Assets:Investments:Broker DEF:Mutual Fund:FUND 1
> > Assets:Investments:Broker DEF:Mutual Fund:FUND 2
> > Assets:Investments:Broker DEF:Mutual Fund:FUND 3
> > Assets:Investments:Broker DEF:Mutual Fund:FUND 4
> >
> > This should solve the problem in a handy, strong and clear way.
> > (I know, this should be a gnucash-user email group discussion, just to
> > know your opinion)
> >
> > Comment 5 from Chris Good:
> >
> > Hi Alberto,
> >
> > Your new suggestion still has multiple splits for different stock (or
> > mutual fund) accounts in the 1 transaction.
> >
> > You need to do for your example 1:
> >
> > Transaction 1: Sell Fund 1
> > Assets:Investments:Broker DEF:Mutual Fund:FUND 1 Credit Assets:Current
> > Assets:Checking Account:DUMMY BANK Debit
> >
> > Transaction 2: Buy Fund 2
> > Assets:Investments:Broker DEF:Mutual Fund:FUND 2 Debit Assets:Current
> > Assets:Checking Account:DUMMY BANK Credit
> >
> > You can use the real bank account or brokerage account so long as you
> > remember these transactions will not appear on your bank statement.
> >
> > Please see [2] for info on how to use lots for automatic calculation
> > of gain.
> >
> > [1] https://bugzilla.gnome.org/show_bug.cgi?id=776300
> > [2]
> > https://www.gnucash.org/docs/v2.6/C/gnucash-guide/invest-sell1.html#in
> > vest-sellLots
> >
> > Regards, Chris Good
> Hi Chris,
> 
> with dummy transactions all works fine: both switch and multiple
investment
> operations.
> You must avoid split transactions at all, in order to have correct
Advanced
> Portfolio values.
> Moreover, assumed that after a total sell (0 shares owned):
> 
> Money Out - Money In + Income - Brokerage Fees = Total Return
> 
> I realized the problem is with reinvested dividends too: if you follow the
user
> manual "Dividends Re-Invested" chapter, the transaction seems to be a
split
> transaction for Advanced Portfolio, with incorrect Money In column values.
> To solve the problem, again I used a dummy transaction: first pay the
> dividend, then invest it.
> 
> Maybe user manuals should be improved for not-so-experienced users like
> me.
> 
> Thanks for your kindness, best regards Alberto

Hi Alberto, 

Sorry about the long delay since my last response which is due to my
holidays.

I guess when you are talking about split transactions, you mean where there
are 2 splits for different stocks in the same transaction. As there are at
least 2
splits in every transaction, it is not possible to avoid split transactions.

I'm afraid I don't understand where or how exactly you think the manual can
be improved. If you can give specific example(s) of where it is wrong and
what
it should be, I'll see if I can make it better.

Regards, Chris Good

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