doug2500 wrote:I'm only interested in total return, it doesn't matter to me where the money comes from, I'm still contributing to my portfolios.
My problem is that I have nominee ISA's along with certificates and a CREST account which lend themselves to the two different types of unitisation. Whichever I choose leads to a fair bit of work re dividends in the other portfolio, and I just don't know if I'm up for it. Time is an issue and I'm trying to simplify things. Things are not helped by having multiple brokers / fund houses. I could reduce but I like having more than one broker. At the moment I have three until I see what's happening with TDD, but I'd be happy with two. To further complicate things I own some funds in my share dealing accounts.
In that case, my suggestion would be the following - there's nothing much in it that wasn't in my earlier post, I'm just making it more concrete now that I know more about what you want:
* If you haven't already got one, open a dedicated bank account that you use as the central hub of all your investments (both shares and funds to avoid the complications you fear from holding both). For ISAs and any other nominee accounts that use a broker cash balance, use it to supply funds to or withdraw funds from the accounts. For nominee accounts that use a linked bank account, use it as the linked bank account. Treat CREST accounts like nominee accounts, except that you also mandate dividends into the dedicated bank account, pay any cheques received for them (either dividends received before the dividend has been mandated, or other cheques for corporate action proceeds) into it, and pay any corporate action costs from it (e.g. the subscription price for taken-up rights). Do the same about dividends and corporate actions for certificated holdings, and also use the dedicated bank account to supply the funds for any new certificated purchases and receive the proceeds of any certificated sales. Other than that, use the dedicated bank account for all transfers of money into your investments or out of them, and
only for such transfers -
don't use it for everyday purposes such as paying bills, paying for shopping, etc!
* Regard all the share/fund accounts, all the share certificates and the dedicated bank account as being 'inside' the portfolio and everything else as 'outside', and calculate accumulation units only. You then only have to do a unitisation calculation each time you transfer money between the dedicated bank account and the 'outside world', which I would suggest you make a quarterly or monthly event, depending on how quickly you're accumulating 'new cash' to add to your investments and how eager you are to get it out of cash and into share/fund investments. Buys, sells, dividends and corporate actions don't cause any unitisation calculations because they remain completely 'inside' the portfolio, nor any "income per income unit" calculations because you're not calculating income units.
* One thing I should emphasise is that you do have to value the
entire portfolio each time you do a unitisation calculation. That's more work than just valuing the account that you do a transaction in, but it will probably happen a lot less frequently. And it might fit in well with a quarterly or monthly skim review around the entire portfolio, looking e.g. for accumulations of cash that have grown large enough to fund a cost-effective purchase.
Or of course abandon the idea of doing unitisation - the above can keep the work involved down, but it does still involve some work, both to set it up and to run it once set up. Only you can decide whether you consider that work worthwhile!
Incidentally, precisely the same approach can simplify the cashflows required for IRR calculations. Basically, unitisation and IRR calculations both require one to have a clear 'inside' vs 'outside' distinction, with data about all cashflows between 'inside' and 'outside', and they use exactly the same cashflow data as each other - it's just that unitisation additionally requires valuations on the dates of the cashflows.
Gengulphus