To evaluate my investment strategy (with regular cash flows), I check my TTWRR and IRR with respect to several benchmarks like MSCI World, Nasdaq,…
But PP is always calculating IRR as being 0 for these benchmarks.
is this a bug or am I having some understanding mistake? I am also relatively new to investing.
Ask yourself how the IRR is calculated and what a benchmark is.
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Thanks @lauraschwab99,
really a great article. I wonder I never found it while searching.
Is this a mistake? Why was the end value of share 2 used in the calculation instead of the cashflow (similar to share-1) ?
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@hug-sch … check this ?!
Yes, this is a mistake. It should be -as you suggest- the cashflow. I’ve corrected it. Thanks for pointing it out.
I will also try to improve the next part on security IRR. Please, don’t hesistate to make any suggestions.
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thanks for the quick feedback. nevertheless, I still can’t understand PP calculation.
if there are no cash flow, then IRR is simply the ruturn (RD1 is thus 365) and can also be calculated using the formula:
But as you can see in the following screenshot, PP is calculating 0:
Unless I am mistaken, from your picture the data serie used in the IRR widget does not seem to be a benchmark, while it is a benchmark in the TTWRR widget. Can you use it as a benchmark in the IRR widget ?
it is exactly the same ETF, the only difference is that when I want to select a benchmark for IRR, it only offers “select Data” and no “select benchmak”
Ok, so comparing the widget behavior and the Return/Volatility chart, the current behavior is :
1- IRR and TTWROR of non-benchmark security with no cashflow, no transaction, only historical prices returns 0 for both IRR and TTWROR (both in Return/Volatility chart and widget)
2- IRR and TTWROR of benchmark security with no cashflow, no transaction, only historical prices returns something in the Return/volatility graph (IRR=TTWROR in this case)
3- IRR widget does not allow to select a benchmark serie while TTWROR widget does allow it.
So 2&3 are indeed inconsistent. If Return/vol chart provides an IRR for a benchmark, the widget should do the same. Or none of them should.
It is very easy to update IRR widget to allows benchmark, it did not trigger any error, I can propose the update on github if this is the expected behavior, :
edit: I proposed it on github, if it is accepted it should be available in the next update
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