Why a 5% drop in NMSCX (Columbia Small Cap Index Fund)?

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xoverlord6
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Why a 5% drop in NMSCX (Columbia Small Cap Index Fund)?

Post by xoverlord6 » Wed Dec 11, 2013 4:30 am

Hi guys, fairly inexperienced investor here.

I noticed on Monday (Dec 9) that my portfolio was down quite a bit for a calm day on the market. I have 3 Columbia Management mutual funds, class Z: Large cap (NINDX), Mid cap (NMPAX), and Small cap (NMSCX), I tilt towards small. The market (S&P, etc) was up a little bit on Monday, but all my Columbia funds were down quite a bit, especially the small cap (NMSCX) which was down about 5%. Doesn't make much sense to me cause similar small cap index funds like Vanguard's didn't do anything like that. The largest holding in NMSCX is ~1% of the fund's value, so it's not like 1 bad investment could have taken them down...

Could this be them paying some bills (taxes?) or charging some strange fees? As far as I can tell, these funds have nothing other than a smallish expense ratio (.23% for NMSCX, .42% for NMPAX, .20% for NINDX). I don't know a lot about how NAV of a mutual fund are calculated on a day to day basis, but in the past mine have generally followed the performance of the market.

How would I find out more about a seemingly random drop in NAV like this? I'm skimming the prospectus for any surprises, but I don't really know what I'm looking for.

Thinking its about time for me to get rid of these and get some Vanguard funds for peace of mind... :)

Thanks for any pointers!

jasg
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Re: Why a 5% drop in NMSCX (Columbia Small Cap Index Fund)?

Post by jasg » Wed Dec 11, 2013 3:47 pm

Dividend payout?

plats
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Re: Why a 5% drop in NMSCX (Columbia Small Cap Index Fund)?

Post by plats » Wed Dec 11, 2013 3:51 pm

A common question in December. Did you check the website? Your three funds had distributions on Dec. 9, so if you reinvest you now have more shares. If not, you'll get the distributions in cash.

https://www.columbiamanagement.com/cont ... IMATES.PDF

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nisiprius
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Re: Why a 5% drop in NMSCX (Columbia Small Cap Index Fund)?

Post by nisiprius » Wed Dec 11, 2013 3:53 pm

Yes, dividend payout.

Image

I think I can call myself a Vanguard fan, am currently all-Vanguard in my mutual fund investments, etc. but to my mind it is more accurate to say

"No funds are better than Vanguard's"
than to say
"Vanguard's funds are best."

There are some curious differences in detail between the performance of Columbia's and Vanguard's small cap index fund but offhand I don't see any compelling reason to change from either one to the other.

Image
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

xoverlord6
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Re: Why a 5% drop in NMSCX (Columbia Small Cap Index Fund)?

Post by xoverlord6 » Wed Dec 11, 2013 6:29 pm

Well I guess someone had to ask the newbie question! Thanks guys.

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Barry Barnitz
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Re: Why a 5% drop in NMSCX (Columbia Small Cap Index Fund)?

Post by Barry Barnitz » Wed Dec 11, 2013 6:34 pm

Nisi:

The Columbia fund tracks the S&P 600 index. A better comparison fit would be the Vanguard Tax-Managed Small Cap fund which also tracks the S&P 600.

regards,
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nisiprius
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Re: Why a 5% drop in NMSCX (Columbia Small Cap Index Fund)?

Post by nisiprius » Wed Dec 11, 2013 6:49 pm

Barry Barnitz wrote:Nisi:

The Columbia fund tracks the S&P 600 index. A better comparison fit would be the Vanguard Tax-Managed Small Cap fund which also tracks the S&P 600.

regards,
:oops:

Interesting. Yes, similar ups and downs... and almost 1% per year higher returns. You mean Vanguard's funds are best? :twisted:

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But is so often the case... all the outperformance happened over a very short period of time, all in the first couple of years...

Image
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

xoverlord6
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Re: Why a 5% drop in NMSCX (Columbia Small Cap Index Fund)?

Post by xoverlord6 » Thu Dec 12, 2013 7:51 am

nisiprius wrote:
But is so often the case... all the outperformance happened over a very short period of time, all in the first couple of years...
Never ceases to amaze me how the implicit story of a graph can change via small tweaks to the start/end dates.

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House Blend
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Re: Why a 5% drop in NMSCX (Columbia Small Cap Index Fund)?

Post by House Blend » Thu Dec 12, 2013 11:16 am

I am too lazy to look it up, but I will predict that the point where the charts start to align nicely also coincides with the Vanguard fund switching from some other index to the S&P600.

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