Tracking Account | Spoke Fund ®

	calesmith	0
	Hi Adam, Sorry for the delay. Man, I gotta lift my head up once in a while during these market downturns...too much fun looking at new companies. To your question - I established a tracking account just for performance measurement - or more specifically, to enable a third party to verify the portfolio's performance numbers independent of me and FOLIO. So, once I figured out what I wanted my portfolio to contain on day one...names and percent weightings, specifically...I created my Tarpon model a few minutes before the 11 am trading window at FOLIO, then synced my tracking account to it, so the trades went off in that window. The result is that there is effectively no difference between the model in Folio and the tracking account in terms of performance, and I use the latter when talking returns. It's a "funded model" in other words, and really forms the basis of the fund. (I actually synced a couple of other accounts to it to on that first day, but those were immaterial in terms of performance measurement.) As John said, FOLIO does have its own performance measurement tool (basically a graph that your and/or your investors can plug in different dates and benchmarks to), but FOLIO computes its numbers using the modified Dietz method, like mutual funds. I preferred to use a regular holding period return calculation because (1) it's just common sense (money in, money there at the end of the month) and (2) that could more easily be verified by someone else and (3) I was going to be recording the value of that tracking account at the close every day, and that can throw Dietz out of whack. (More here on Dietz: http://en.wikipedia.org/wiki/Modified_Dietz_Method and more on my own numbers here: https://www.islainvest.com/performance.htm) Anyway, those Folio numbers are not as accurate as those in the tracking account. To me, anyway. I can prove my performance numbers are as advertised because of that tracking account...meaning I can pull monthly statements for that account as well as all trading confirmations, and you can recreate the same performance numbers...but there is no way to verify or reproduce those numbers historically if you use FOLIO's tool. So, someone can verify my performance pretty easily thanks to the tracking account, and while I suppose they could probably do it with FOLIO's tool, too, trying to figure out exactly how they would do it starts to make my head (and wallet) hurt. All that said, John's other point there is also very accurate...my clients find FOLIO's tool to be great. It's just that when it comes to performance measurement and advertising, I want to err on the side of having verifiable/conservative numbers for a common account, set up right originally. At the time, I also did not think I'd be able to be GIPS compliant using the tracking account, but it turns out that I can be. Was having that conversation last month...am actually considering paying the $$ for an independent formal verification once the funds pass 3 years in age. So, kind of a nice surprise there, too, I suppose. Hope that helps...? Cale
	Fri, Jun 24 '11 at 4:40PM EDT	Post 3 • IP

	AdamW	0
	Be great to understand your thinking behind the tracking account in Folio; how you set it up and why you set it up, specifically. Doesn't Folio have performance tracking built in? Thanks, Adam
	Wed, May 18 '11 at 2:20PM EDT	Post 1 • IP

	johnrothe	0
	Adam- I did a tracking account to keep an untouched model at Folio. I add money to my "main" account, which will benefit/hurt the performance depending when I buy in. By using an untouched model account, I can better track the true performance. And yes, Folio does include performance tracking - it is basic, but I have found most of my clients don't want anything more complicated. Best, John
	Thu, May 26 '11 at 8:52AM EDT	Post 2 • IP

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