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Why Use the Junto Portfolio Tracker?

A portfolio tracker is a tool that allows investors to track their individual investment holdings and their portfolio on a collective basis.

There Are Many Portfolio Trackers

There are a ton of portfolio trackers available in the market, free or paid. Essentially, they all attempt to provide the same information but they differ immensely in doing so.

Brokerage firms generally provide good visibility into the performance of a portfolio but they don’t collect information from other sources and may only provide very basic information.

Other portfolio trackers simply provide real-time pricing and tracking of investors’ invested capital. That is, they don’t take the entire portfolio, including its cash allocation, into account.

But, here is the most important aspect of properly tracking investments: It’s the cash and amount of capital invested.

Time-Weighted vs. Money-Weighted Returns

For most investors, the percentage return they get differs in the importance of whether that return was made on $1,000 or $1,000,000. And therefore, what matters for most investors is the money-weighted return.

The reason we say most investors is that most investors have full control over the timing of cash inflows or outflows of their portfolio. Professional fund managers don’t and are instead mostly evaluated based on the time-weighted return of their portfolio because it gives the same weight to different return periods regardless of the amount of capital invested in those periods.

The problem is that almost no portfolio tracker gives investors the money-weighted return because it’s not a simple thing to calculate. It requires that each injection or withdrawal of cash into and out of the portfolio is registered and incorporated into the return calculation.

A Real-World Example

Consider this rather realistic real-world scenario:

  1. You buy 1,000 shares of The Walt Disney Company.
  2. The stock price goes down and you add to your position to decrease your average cost.
  3. You receive a dividend from the company.
  4. You buy more shares.
  5. You sell a fraction of your shares.
  6. The company does a stock split.
  7. You want to buy more shares but you don’t have enough cash in your brokerage account.
  8. You inject enough cash to increase your desired position.
  9. You buy the shares.
  10. The stock price rises above your estimation of fair value and you sell all your shares.

Instead of two simple transactions, this investment now involves nine. Now, what is your average cost for the number of shares you sold at transaction 5 and 9? What is the yield on your cost and not the current market price? What is your total return given the dividend received? Because you injected additional capital to your portfolio at transaction 7, what is the money-weighted return? How much of your return have you realized until transaction 8?

Very few portfolio trackers provide the right answers to these kinds of questions because they are not transaction-based.

And this is where the free Junto Portfolio Tracker differs from other trackers out there.

In the Portfolio Tracker, every transaction which involves a conversion of cash is registered using a smart cash register which takes care of calculating the correct money-weighted return on your portfolio.

To get an overview of how it works and its basic parts, read: The Parts of the Portfolio Tracker

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