Hello Everyone,
This is my first post- so thanks in advance for letting me join. I look forward to getting tips and sharing tips from this website.
I am faced with a challenge, I am to calculate returns for individual partners in an investment fund. This sounds easy, but my major challenge arises from the fact that although the partners are all invested in the same securities, some have made additional contributions since inception. I have been using the following formula to calculate these returns for each month:
Return = (MV(E)-MV(B)-F)/(MV(B)+FW)
MV(E)= Ending Market Value
MV(B)= Beginning Market Value
F= Sum of cashflows within period (contributions are positive, withdrawals are negative)
FW= Sum of each cashflow, times its weight (W)
W=(CD-D)/CD
CD= # of days in the period
D= # of days since the beginning of the period in which the cashflow occured (ie # of days up until the cashflow occured).
If you examine this formula, you will see it does indeed work for monthly returns, but I cannot figure out how to do inception-to-date returns accounting for the additional contributions. I am trying to play around with some array functions, but I am getting nowhere. Does anybody have any ideas? Thanks again for any help or suggestions that can be provided.
This is my first post- so thanks in advance for letting me join. I look forward to getting tips and sharing tips from this website.
I am faced with a challenge, I am to calculate returns for individual partners in an investment fund. This sounds easy, but my major challenge arises from the fact that although the partners are all invested in the same securities, some have made additional contributions since inception. I have been using the following formula to calculate these returns for each month:
Return = (MV(E)-MV(B)-F)/(MV(B)+FW)
MV(E)= Ending Market Value
MV(B)= Beginning Market Value
F= Sum of cashflows within period (contributions are positive, withdrawals are negative)
FW= Sum of each cashflow, times its weight (W)
W=(CD-D)/CD
CD= # of days in the period
D= # of days since the beginning of the period in which the cashflow occured (ie # of days up until the cashflow occured).
If you examine this formula, you will see it does indeed work for monthly returns, but I cannot figure out how to do inception-to-date returns accounting for the additional contributions. I am trying to play around with some array functions, but I am getting nowhere. Does anybody have any ideas? Thanks again for any help or suggestions that can be provided.
