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For IB at least, during the reporting period the NAV will be used in combination with net deposit/withdrawal. The % return on capital is based on the starting balance on the first day of the reporting period. From that day forward, IB calculates the NAV +/- the deposit/withdrawal activity.
For the time period report (day by day return) it uses the NAV at the close from the prior day to calculate the return of the current day, also calculated at the close. So for example looking at my report, on January 20th I had a 18.38% return, meaning my account capital grew 18.38% close-to-close from Jan 19 to Jan 20. If I had a withdrawal on that same day, it would not effect the % return, as it is based on NAV.
Someone please feel free to correct me if I am wrong, but this is my understanding. I should probably double check to see if I am right so don't bet your life on it until you've done so for yourself.
Calculating the NAV on the day PRIOR to the withdrawal is required. If you withdraw on the 2nd, you would calculate a NAV per share as of the 1st, adjust your number shares and then recalculate your NAV per share at month-end. In my example above, if the withdrawal happened on the 2nd, the number of shares would be adjusted downwards to 909,0909. If the account is then at $9,500 at month end, the NAV per share would be 10.45.
I used to calculate my NAV on a daily basis, but that is not really required. You only need a starting NAV, a NAV on the day before withdrawals and then a NAV on your preferred return dates (month-end, quarter-end, or year-end).
Mike, you are correct. The percentage return is calculated by calculating (NAVtoday / NAVyesterday) - 1. If you have a withdrawal on the 20th, then IB would need to adjust the NAVyesterday (19th) for that withdrawal. However, this is only applicable from the 20th onwards and no adjustment is made for the % calculation on the 19th.
IB's method is similar to the method I highlighted earlier. The algebra has just been shuffled around a bit and it is probably easier to calculate this way in Excel. I recall using this approach for my initial performance spreadsheets, but honestly can't remember why I changed. Could just be that it made troubleshooting in Excel easier.
