Comparing fund NAVs and returns

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roamin survivor
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Comparing fund NAVs and returns

Post by roamin survivor » Tue Oct 03, 2017 8:05 am

I'm looking to see if my line of thinking is correct.

Current;y comparing two funds, Vanguard Ttl Int Index (VTIAX) in a Roth and a 401k's own Int Index. There's a large difference in NAV price: VTIAX is x12 higher with an ER of .11 comapred to the 401k's ER of .08.

What I'm thinking is that I should be comparing returns to see which fund has performed better instead of looking as getting more "units" with the lower NAV. This would be because the NAV is also dependent on total fund asset, which VTIAX is $300 billion versus a smaller 401k fund. So far, the returns between the two are within +/- 2% of each other with VTIAX performing better in the past 3 years. Since the returns already take the ER into account, what I'm thinking is that they are comparable to each other, but lower cost NAV would require equal or higher returns to match the higher cost NAV?

dbr
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Re: Comparing fund NAVs and returns

Post by dbr » Tue Oct 03, 2017 8:55 am

roamin survivor wrote:
Tue Oct 03, 2017 8:05 am
I'm looking to see if my line of thinking is correct.

Current;y comparing two funds, Vanguard Ttl Int Index (VTIAX) in a Roth and a 401k's own Int Index. There's a large difference in NAV price: VTIAX is x12 higher with an ER of .11 comapred to the 401k's ER of .08.

What I'm thinking is that I should be comparing returns to see which fund has performed better instead of looking as getting more "units" with the lower NAV. This would be because the NAV is also dependent on total fund asset, which VTIAX is $300 billion versus a smaller 401k fund. So far, the returns between the two are within +/- 2% of each other with VTIAX performing better in the past 3 years. Since the returns already take the ER into account, what I'm thinking is that they are comparable to each other, but lower cost NAV would require equal or higher returns to match the higher cost NAV?
The value of a share means nothing. You can buy 10 shares at $100 or 100 shares at $10 and it is the same thing. Returns are not different for different NAV because return is a ratio of gain to NAV. If you compare the returns of two funds that intend to track the same index, then a difference in performance might be due to a difference in expenses and/or it might be due to a difference in how well the fund tracks the intended index. It can also happen that two funds with the same "name" intend to track different indices. To examine how the funds differ you need to read the prospectus, examine the holdings, and look at the annual reports to find out fund costs including expense ratio, internal trading costs,securities lending, etc.

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dm200
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Re: Comparing fund NAVs and returns

Post by dm200 » Tue Oct 03, 2017 8:57 am

The value of a share means nothing
Absolutely true....

roamin survivor
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Re: Comparing fund NAVs and returns

Post by roamin survivor » Tue Oct 03, 2017 9:56 am

Thank you, looks like I'll have to dig deeper then. I did compare the fund holdings and the saw the only difference would be the top 10 holdings at different placements. Even the regional percentages were close to the same. Seems like I'll need further into prospectus with sectors as well.

pkcrafter
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Re: Comparing fund NAVs and returns

Post by pkcrafter » Tue Oct 03, 2017 10:42 am

roamin survivor wrote:
Tue Oct 03, 2017 8:05 am
I'm looking to see if my line of thinking is correct.

Current;y comparing two funds, Vanguard Ttl Int Index (VTIAX) in a Roth and a 401k's own Int Index. There's a large difference in NAV price: VTIAX is x12 higher with an ER of .11 comapred to the 401k's ER of .08.

What I'm thinking is that I should be comparing returns to see which fund has performed better instead of looking as getting more "units" with the lower NAV. This would be because the NAV is also dependent on total fund asset, which VTIAX is $300 billion versus a smaller 401k fund. So far, the returns between the two are within +/- 2% of each other with VTIAX performing better in the past 3 years. Since the returns already take the ER into account, what I'm thinking is that they are comparable to each other, but lower cost NAV would require equal or higher returns to match the higher cost NAV?
Is your 401k fund the same fund, i.e. VTIAX, or is it another total international fund? The 401k's fund ER is very low, but there are other fees associated with a 401k, so overall, you are paying more for the 401k fund and if the funds are identical then the difference in performance over 3 years is due to those operational fees.

Another difference may be the benchmark the fund tracks. VTIAX tracks the FTSE Global All Cap ex US Index. If you 401k fund tracks a difference benchmark, that would also cause performance to vary a bit.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

roamin survivor
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Re: Comparing fund NAVs and returns

Post by roamin survivor » Wed Oct 04, 2017 10:30 am

pkcrafter wrote:
Tue Oct 03, 2017 10:42 am
Another difference may be the benchmark the fund tracks. VTIAX tracks the FTSE Global All Cap ex US Index. If you 401k fund tracks a difference benchmark, that would also cause performance to vary a bit.
Fees were all listed in the ER, but I did find out that both 401K and Vanguard funds track the same benchmark (MSCI EAFE) for the International Index. Most of the other index fund between the two also use the same benchmarks. Does this mean comparing fund returns to the same benchmarks would be a useful tool in comparing fund performance vs fees?

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David Jay
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Re: Comparing fund NAVs and returns

Post by David Jay » Wed Oct 04, 2017 6:29 pm

Think of the NAV as the size of the container as away to visualize this.

If the NAV of an SP500 fund is $100 and another SP500 fund is $25 then I like to think of it as the first fund is selling a "gallon" of SP500 and the other fund is selling a "quart" of SP500. Same stuff, different amount in the container. If you purchase 4 shares ("quarts") of the second fund, you get the same amount (a "gallon") as the first fund for the same $100.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

pkcrafter
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Re: Comparing fund NAVs and returns

Post by pkcrafter » Wed Oct 04, 2017 7:45 pm

roamin survivor wrote:
Wed Oct 04, 2017 10:30 am
pkcrafter wrote:
Tue Oct 03, 2017 10:42 am
Another difference may be the benchmark the fund tracks. VTIAX tracks the FTSE Global All Cap ex US Index. If you 401k fund tracks a difference benchmark, that would also cause performance to vary a bit.
Fees were all listed in the ER, but I did find out that both 401K and Vanguard funds track the same benchmark (MSCI EAFE) for the International Index. Most of the other index fund between the two also use the same benchmarks. Does this mean comparing fund returns to the same benchmarks would be a useful tool in comparing fund performance vs fees?
MSCI EAFE is Europe, Asia and Far East, no emerging markets, so not total market. Vanguard Total International Stock Index Fund tracks the FTSE Global All Cap ex US Index.

https://personal.vanguard.com/us/funds/ ... =INT#tab=2

Note on Devleoped Market Index (EAFE) Index: MSCI EAFE Index through May 28, 2013; FTSE Developed ex North America Index through December 20, 2015; FTSE Developed All Cap ex US Transition Index through May 31, 2016; FTSE Developed All Cap ex US Index thereafter. Benchmark returns are adjusted for withholding taxes.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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