Wrote Asset Allocation section
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Craig Earls
John Wiegley
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123
doc/ledger3.texi
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doc/ledger3.texi
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@ -45,7 +45,7 @@ OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
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@titlepage
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@title Ledger: Command-Line Accounting
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@subtitle For Version 3.0 of Ledger
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@subtitle Draft Manual Time-stamp: <2011-11-16 22:34 (cpearls)>
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@subtitle Draft Manual Time-stamp: <2011-11-18 22:35 (cpearls)>
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@author John Wiegley
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@end titlepage
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@ -2638,6 +2638,7 @@ kill the report buffer
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@menu
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* Introduction::
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* Balance Reports::
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* Advanced Reports::
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@end menu
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@node Introduction, Balance Reports, Building Reports, Building Reports
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@ -2650,7 +2651,7 @@ show you the basics of combining varous options and commands. In the next
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chapters you will find details about the specific commands and
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options.
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@node Balance Reports, , Introduction, Building Reports
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@node Balance Reports, Advanced Reports, Introduction, Building Reports
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@section Balance Reports
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@menu
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* Controlling the Accounts and Payees::
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@ -2744,6 +2745,124 @@ These examples all use the default formatting for the balance
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report. Customizing the formatting can easily allowing to see only what
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you want, or interface Ledger with other programs.
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@node Advanced Reports, , Balance Reports, Building Reports
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@section Advanced Reports
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@menu
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* Asset Allocation::
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@end menu
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@node Asset Allocation, , Advanced Reports, Advanced Reports
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@subsection Asset Allocation
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A very popular method of managing portfolios is to control the
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percent allocation of assets by certain categories. The mix of
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categories and the weights applied to them vary by investing
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philosophy, but most follow a similar pattern. Tracking asset
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allocation in ledger is not difficult but does require some additional
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effort to describe how the various assets you own contribute to the
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asset classes you want to track.
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In our simple example we assume you want to apportion you assets into
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the general categories of domestic and international equities (stocks)
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and a combined category of bonds and cash. For illustrative purposes we
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will use several publicly available mutual funds from Vanguard. the
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three funds we will track are the Vanguard 500 IDX FD Signal (VIFSX),
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the Vanguard Target Retirement 2030 (VTHRX), and the Vanguard Short Term
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Federal Fund (VSGBX). Each of these funds allocates assets to different
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categories of the investment universe and in different proportions.
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When you buy a share of VTHRX, that share is partially invested in
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equities, and partially invested in bonds and cash. Below is the asset
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allocation for each of the instruments listed above:
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@multitable @columnfractions .2 .2 .3 .3
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@item @tab Domestic @tab Global @tab
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@item Symbol @tab Equity @tab Equity @tab bonds/cash
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@item VIFSX @tab 100% @tab @tab
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@item VTHRX @tab 24.0% @tab 56.3% @tab 19.7%
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@item VSGBX @tab @tab @tab 100%
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@end multitable
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These numbers are available from the prospectus of any publicly
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available mutual fund. Of course a single stock issue is 100% equity
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and a single bond issue is 100% bonds.
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We track purchases of specific investments using the symbol of that
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investment as its commodity. How do we tell Ledger that a share of
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VTHRX is 24% Global equity etc.? Enter automatic transactions and
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virtual accounts.
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At the top of our ledger we enter automatic transactions that describe
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these proportions to Ledger. In the same entries we set up virtual
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accounts that let us separate these abstract calculations from our
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actual balances.
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For the three instruments listed above, those automatic transactions
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would look like:
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@smallexample
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;
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; automatic calculations for asset allocation tracking
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;
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= expr ( commodity == 'VIFSX' )
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(Allocation:Equities:Domestic) 1.000
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= expr ( commodity == 'VTHRX' )
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(Allocation:Equities:Global) 0.240
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(Allocation:Equities:Domestic) 0.563
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(Allocation:Bonds/Cash) 0.197
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= expr ( commodity == 'VBMFX')
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(Allocation:Bonds/Cash) 1.000
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@end smallexample
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How do these work? First the `=' sign at the beginning of the line tells
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ledger this is an automatic transaction to be applied when the condition
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following the `=' is true. After the `=' sign is a value expression
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(@pxref{Value Expressions}) that returns true any time a posting
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contains the commodity of interest.
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The following line gives the proportions (not percentages) of each unit
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of commodity that belongs to each asset class. Whenever Ledger sees a
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buy or sell of a particular commodity it will credit or debit these
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virtual accounts with that proportion of the number of shares moved.
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Now that Ledger understands how to distribute the commodities amongst
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the various asset classes how do we get a report that tells us our
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current allocation? Using the balance command and some tricky formatting!
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@smallexample
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ledger bal Allocation --current --format "\
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%-17((depth_spacer)+(partial_account))\
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%10(percent(market(display_total), market(parent.total)))\
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%16(market(display_total))\n"
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@end smallexample
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Which yields:
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@smallexample
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Allocation 100.00% $100000.00
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Bonds/Cash 38.94% $38940.00
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Equities 61.06% $61060.00
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Domestic 95.31% $58196.29
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Global 4.69% $2863.71
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@end smallexample
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Let's look at the Ledger invocation a bit closer. The command above is
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split into lines for clarity. The first line is very vanilla Ledger
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asking for the current balances of the account in the ``Allocation''
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tree, using a special formatter.
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@cindex depth_spacer
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@findex depth_spacer
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@findex display_total
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@findex parent.total
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The magic is in the formatter. The second line simply tells Ledger to
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print the partial account name indented by its depth in the tree. The
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third line is where we calculate and display the percentages. The
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@code{display_total} command give the values of the total calculated for
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the account in this line. The @code{parent.total} command gives the
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total for the next level up in the tree. @code{percent} format their
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ratio as a percentage. The fourth line tells ledger to display the
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current market value of the the line.
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@node Reporting Commands, Command-line Syntax, Building Reports, Top
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