I've found out on through Google the answer but I need help implementing it.
What I found out in a message from Pete Prossen is listed below. However I am not sure how to implement it in Q2005 D. Specifically, how do I :
a) edit the present value of a bond (in this case GNMA)? b) prevent downloads or updates re-changing it to the nominal face value? c) is there a way to automate the "factor" (see below) so future price updates become correct?
Could someone help?
Thanks.
Jeff ........................................................ Pete Prossen's email from 2002.
Try thinking of a GNMA as a somewhat specialized bond. Here's how it works:
When you purchase a GNMA security it is, as you say, a bond. And since no individual is likely to purchase the entire pool, it is apportioned to all the investors in some kind of units. It seems to be customary in the bond market to call 100 of these units a "share", perhaps for lack of a better word. In any case, the name matches that of the column in Quicken investment register where you should enter it.
Suppose you purchased your GNMA from, say, Charles Schwab and lets say you purchased 59,500 units (595 shares) at a share price of $100. Through the life of the GNMA, mortage holders will be paying down and refinancing, so the principal amount is gradually recovered. You receive your proportional share of this in the form of Return of Capital payments, and of course the value of the investment declines. So does the size of the fixed-rate interest payments you receive. But your proportion of the entire issue never changes. It will always be 59,500 units and this will always appear on your brokerage statement. Your Quicken register will always show 595 shares.
Since GNMA's can be sold, your brokerage will report a share value each month (not a 100x unit value). Since GNMA's are a relatively stable investment (as compared to .com tech stocks), that share value will hover around the $100 original issue price. How, then, do we cope with the declining value issue?
It's called "the Factor", and your brokerage statement will include it on each monthly statement. Multiply the face amount of the bond by the factor and you will obtain its remaining amortized value. Multiply the current price per share (available daily from your broker's bond desk but not included in Quicken quotes download) and you will have the "factored quote" value to manually enter in Quicken to establish the market value for the GNMA that day.
In summary, treat your GNMA as you would any other bond in Quicken and update the quoted share price manually like you must for any other bond. But if you want to keep the account market value accurate be sure to adjust the quoted share price by the factor. I do this monthly from the data provided on the statements, but I suspect you could examine the downloaded holdings and valuations and deduce the factor for any day of the month for which you download.
Oh, and if your GNMA happens to be held at Schwab and you download account transactions into Quicken, the return of capital transactions will already be marked with the RtrnCapX action code. And of course, the interest component will be marked with the IntIncX action code. Other brokerages, Fidelity for one, aren't yet smart enough to do this. I think they mark the return of capital as Xin, which must be then edited.
Eventually, your returns from the GNMA will slow to a trickle because of those few steadfast mortgage holders in the pool who are determined to pay off their 25-year loan. You'll wonder if it is worth the trouble to keep updating it in the portfolio. .....................