Author Topic: Best way to measure true return?  (Read 4549 times)

rj2

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Best way to measure true return?
« on: August 08, 2017, 10:59:25 PM »

We all know that ANAR is pretty useless. What do people do instead.

I looked at my July statement, being half way through the year: $13003 account value, $814.77 in interest, $640.96 in charge-offs, $173.81 net return.

$173.81/$13003 = 1.34% or about 2.69% annualized. Weighted Average Return 16.5%.

bluto

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Re: Best way to measure true return?
« Reply #1 on: August 09, 2017, 12:57:21 AM »
My preference is XIRR (a spreadsheet function) using every cashflow in to and out from the account along with the current adjusted account value. 

If you want an intermediate value, treat it as though the account was created on the first of the month at the adjusted month beginning value, and add any relevant cash flows, and use the adjusted month end or month-to-date value. 




jpildis

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Re: Best way to measure true return?
« Reply #2 on: August 10, 2017, 10:49:20 AM »
My preference is XIRR (a spreadsheet function) using every cashflow in to and out from the account along with the current adjusted account value. 

If you want an intermediate value, treat it as though the account was created on the first of the month at the adjusted month beginning value, and add any relevant cash flows, and use the adjusted month end or month-to-date value.

Agreed. I use my unadjusted balance minus the full value of 31+ day late and defaults.

jheizer

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Re: Best way to measure true return?
« Reply #3 on: August 10, 2017, 11:16:51 AM »
Same.  Life time and individual year's XIRR off the "stock" adjusted account value.
Replacement to P2P Quant's Percentile Tool http://lc.geekminute.com

fliphusker

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Re: Best way to measure true return?
« Reply #4 on: August 10, 2017, 12:31:14 PM »
Does anyone use Google docs to calc XIRR? If so can you give me a quick tutorial?

jheizer

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Re: Best way to measure true return?
« Reply #5 on: August 10, 2017, 01:02:13 PM »
This is more of less what I do  https://docs.google.com/spreadsheets/d/1XpoDKlFfH6adI2U3PTctHxhZn4sR4j-0EbiAdRNUC-o/edit?usp=sharing

The Account value can be what ever you want to track.  I used the adjusted account value as is.  Others above have used different numbers.  The end of year +/- amounts of the account value is so you can do break outs for yearly XIRR if so desired.  It doesn't effect the life time since it all flows on the same date. 
Replacement to P2P Quant's Percentile Tool http://lc.geekminute.com

cgfan

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Re: Best way to measure true return?
« Reply #6 on: August 22, 2017, 02:28:38 AM »
I use XIRR in Google Docs too, though in my case I use the account total as reported in the monthly statements.  But I'd rather use something akin to the adjusted account value - does this appear in any form in the monthly statements?  I have not been able to find it.

At the end of each month I extract key figures from my statements to track account XIRR among other metrics.  While I know I can get the adjusted account value directly from LendingClub's Account Details page, I may not always get to it in a timely enough manner to accurately represent the month just concluded.  This is why I use the account totals from the statement, even though I'd prefer to use the adjusted account value. 

Does anyone know if the adjusted account value can be extracted off of the statements, or alternatively extracted from the website for an arbitrary prior date after the fact?
« Last Edit: August 22, 2017, 02:30:47 AM by cgfan »

mrwhizzard

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Re: Best way to measure true return?
« Reply #7 on: August 22, 2017, 11:34:57 AM »
Does anyone know if the adjusted account value can be extracted off of the statements, or alternatively extracted from the website for an arbitrary prior date after the fact?

It looks to me like the statement contains enough information to calculate the adjusted account value. For each loan with a "late" status ("In Grace Period", "Late (16-30 days)", "Late (31-120 days)", or "Default"), multiply the outstanding principal amount by adjustment percentage (currently LC uses 31%, 61%, 82%, and 89% respectively). Then add all those up and subtract from your end-of-month account value.

SMWinnie

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Re: Best way to measure true return?
« Reply #8 on: September 05, 2017, 08:31:12 AM »
My preference is XIRR (a spreadsheet function) using every cashflow in to and out from the account along with the current adjusted account value. 

If you want an intermediate value, treat it as though the account was created on the first of the month at the adjusted month beginning value, and add any relevant cash flows, and use the adjusted month end or month-to-date value.
With one adjustment, I use bluto's approach. Since I'm interested in IRR to me, I use actual cashflows, on the dates my bank reports them, between my bank and LC. For the current value, I use LC's Adjusted Account Value.

I also calculate with and without accrued interest. Since my account is only about a year old, the accrual adds 0.62% to the account IRR.

kuhnrl30

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Re: Best way to measure true return?
« Reply #9 on: November 30, 2017, 10:42:09 PM »
I had a few defaults early on so one metric I track is how close I am to getting back to even.  I take the ratio of interest received to the defaults and principal in late loans.  Just recently getting over 1.0 means that I've received more interest than what I have/will write off.

Interest received / (Default + Principal >31 days late) = Ratio