[Why did my fund suddenly drop in value?]

stratton · Post by **stratton** » Fri Dec 30, 2011 4:36 pm

Q: My fund is down a lot, what happened?

A: It's distribution time to meet tax requirements. See the fund companies web site.

Paul

livesoft · Post by **livesoft** » Fri Dec 30, 2011 4:43 pm

I'd like to see this as a poll:

I noticed my fund was down big time, so I
(a) Quickly posted to my favorite forums about my huge loss asking "What's up?"
(b) Looked at all the other posts about huge one-day drops on my favorite forums and figured it out
(c) Looked at my fund's web site and figured out there was a distribution
(d) Didn't bother to look because I already knew about distributions this time of year
(e) My fund is down? I didn't even notice.

john94549 · Post by **john94549** » Fri Dec 30, 2011 9:27 pm

Be honest, we all freaked out early on in our investing "lives" when we saw our funds (or ETFs) plunge on an "up" day.

Gosh golly, I remember calling Schwab, who referred me to Vanguard. After about the fourth transfer, somebody suggested it might be "ex-dividend" day, but they weren't sure, but they'd look it up.

After a few moments on hold, you guessed it.

I never could figure out why Schwab or Vanguard didn't just have an option such as "press one if the market was up and your security was down, then enter your security ticker symbol, followed by the pound sign, because you were prolly ex-dividend today."

I seem to have "ex-dividend" days all over the map the third month of each quarter. Then there is my funky taxable mutual fund which determines "ex-dividend" dates at year-end on the basis of the Mayan calendar or something. Don't even get me started on Schwab, which spits out its dividend on SWPPX annually based on the tides.

Post by **LadyGeek** » Fri Dec 30, 2011 9:51 pm

For those who need additional background info, check the wiki: Dividend

kakapo · Post by **kakapo** » Fri Dec 30, 2011 10:43 pm

I know I should know the answer to this, but I didn't see the answer in the wiki...

I have a MF listed with N shares and NAV and a 0.XYZ pending distribution per share. If I want to calculate the correct value as of today, is it: (N * NAV) + (N * 0.XYZ) ? I'm just trying to do my once a year saving a snapshot of financial state, and I'm anal enough to want to do it after the last mkt close of the calendar year.

Thanks!

Post by **LadyGeek** » Sat Dec 31, 2011 11:25 am

The wiki's example might not be clear for pending transactions, but it's in there. Before dividends, it should be (N * NAV), as there's nothing to change yet.

Wiki wrote:For example:You own 500 shares at $11 per share at year-end, for a total worth of $5,500. There is a $1 per share dividend. Therefore, net of accumulated dividends in the fund, your fund is worth $10 per share. Assuming dividends are reinvested, you'll get $500 ($1 x 500 shares) reinvested in the fund. $500 / $10 per share = 50 additional shares. Now you own 550 shares at $10 each, which equals your original $5,500.

Post-dividend distribution, N = Number of Shares, NAV = Net Asset Value, Dist = Distributed dividends:

total value = (N * (NAV - Dist)) + (N * Dist)

Expanding above is:
= (N * NAV) - (N * Dist) + (N * Dist)
= (N * NAV)

Which is the same total value as before the distribution.

If you want to go further, Yahoo Finance tracks historical pricing by adjusting the close price for dividends and splits. You can see the actual impacts, such as GE Historical Prices (dividend declared Dec 22, 2011). How it's done: Historical Quotes. The intent is to get a reference to the current price, so the process runs in reverse from what's done here.

nisiprius · Post by **nisiprius** » Sat Dec 31, 2011 12:41 pm

livesoft wrote:I'd like to see this as a poll:

I noticed my fund was down big time, so I
(a) Quickly posted to my favorite forums about my huge loss asking "What's up?"
(b) Looked at all the other posts about huge one-day drops on my favorite forums and figured it out
(c) Looked at my fund's web site and figured out there was a distribution
(d) Didn't bother to look because I already knew about distributions this time of year
(e) My fund is down? I didn't even notice.

I'd answer "e" for several reasons. I admit sheepishly that I can't resist peeking at the Dow every week or so--and when a radio commentator says "the Dow was up 150 points today" and doesn't tell me what it got up TO, I can't resist finding out. But I don't look at my individual funds, and I almost never look at the price per share of my individual funds.

In any case, the typical drops in price per share due to distributions seem pretty negligible to me even if I thought they were authentic price movements. If I'm looking at the right day... VTI went from $64/share to $63/share. This is a big deal?

I didn't realize I needed to rebalance my International until someone mentioned something about it the forum. (I would have gotten around to it eventually).

I wouldn't be spooked by a distribution, because either

I look in my actual account (and see the total, including distributions--as well as the distributions themselves); or,
I look at, sorry to be a broken record on this, growth charts, which include the distributions.

Why on earth would anyone ever look at a price chart unless they were a) "traders," or b) constrained by the data the investment industry tends to make easily available (i.e. they are ETF investors and can't find a growth chart?)

bertilak · Post by **bertilak** » Sat Dec 31, 2011 3:51 pm

I have to answer the missing "f: None of the above."

I noticed my fund was down but the corresponding ETF was up. Since they are actually two share classes of the same fund I wondered what was happening and asked on this board. I was real certain it had to do with the dividend but didn't understand why the effect was different on the two share classes. The unexpected (to me) answer was that the payout dates are different for the fund and the ETF. Didn't see that coming! (To quote my favorite Lost character, Hugo)

To complicate matters, Morningstar listed the cap gains part of the dividend but took a couple of days to catch up to the income portion. So, between the fund, the ETF and Morningstar I had several disagreeing reports. My particular situation was the lowest, so I had to ask.

livesoft · Post by **livesoft** » Sat Dec 31, 2011 5:06 pm

So who will resurrect this thread next December?

ejvyas · Post by **ejvyas** » Sat Dec 31, 2011 5:11 pm

livesoft wrote:I'd like to see this as a poll:

I noticed my fund was down big time, so I
(a) Quickly posted to my favorite forums about my huge loss asking "What's up?"
(b) Looked at all the other posts about huge one-day drops on my favorite forums and figured it out
(c) Looked at my fund's web site and figured out there was a distribution
(d) Didn't bother to look because I already knew about distributions this time of year
(e) My fund is down? I didn't even notice.

d, e

I don't look at my funds every day. That is one of the reasons I call them lazy.

gotherelate · Post by **gotherelate** » Sat Dec 31, 2011 6:14 pm

livesoft wrote:So who will resurrect this thread next December?

I'll bet we don't need to wait that long.

Boglenaut · Post by **Boglenaut** » Sat Dec 31, 2011 11:40 pm

This post should be a seasonal sticky.

zottopix · Post by **zottopix** » Thu Dec 26, 2013 5:58 pm

[Thread title was: "Sudden Wellington drop?" See below. -- admin LadyGeek]

Just noted that my Wellington Fund ( VWENX ) dropped 4.25% in 2 days ( 12-24-2013 to 12-26-2013 )…..from NAV 68.21 down to 65.31
Any good reason for this sudden drop?
Just wondering…..

Cut-Throat · Post by **Cut-Throat** » Thu Dec 26, 2013 5:59 pm

[Title was "Market Soars - Vanguard Target Funds Plummet.............", merged into here. See below. --admin LadyGeek]

OK, I'm guessing there is the year end distributions going on here. Except I cannot find any news of this on the Vanguard Website.

I am watching my Portfolio because of Year End calculations, taxes etc..... and expecting a nice gain today, but was dismayed that the Funds I own Dropped 2%-3%.

Target Retirement Income loses almost 2% today alone!

livesoft · Post by **livesoft** » Thu Dec 26, 2013 6:00 pm

Did you see the news about Vanguard accounts being hacked into by some servers based in Russia via a proxy in North Korea?

j/k

All the Vanguard distributions are listed in the Distributions tab for the specific fund including any remaining upcoming year-end distributions. It is not news, so no separate new link is needed: Simply go to your fund on the Vanguard web site and click on the Distributions tab.

fkampere · Post by **fkampere** » Thu Dec 26, 2013 6:00 pm

Divendend?

Sheepdog · Post by **Sheepdog** » Thu Dec 26, 2013 6:01 pm

This was distribution day. It was announced weeks ago.

Artsdoctor · Post by **Artsdoctor** » Thu Dec 26, 2013 6:03 pm

Never fret about a big drop at the end of the year like this. If everything else is up and your fund is down, there's been a reinvestment of dividends. Take a lot at Vanguard's website, find your fund, and click on Distributions. You'll find that today was your reinvestment date. It'll show up in your History tomorrow if you log on.

zottopix · Post by **zottopix** » Thu Dec 26, 2013 6:05 pm

Distributions….?

countdown · Post by **countdown** » Thu Dec 26, 2013 6:06 pm

Yes, Wellington Admiral was down 4.25%. A bit of a surprise until realized what day it was.

countdown · Post by **countdown** » Thu Dec 26, 2013 6:08 pm

Yes.....

CyberBob · Post by **CyberBob** » Thu Dec 26, 2013 6:21 pm

December 24 record date for VWENX (per share):

$0.470 dividend
$0.395 ST cap gain
$2.261 LT cap gain

https://personal.vanguard.com/us/funds/ ... =INT#tab=4

Bob

LAlearning · Post by **LAlearning** » Thu Dec 26, 2013 6:23 pm

Ha...love these posts.

LAlearning · Post by **LAlearning** » Thu Dec 26, 2013 6:24 pm

Ha....love these posts.

sscritic · Post by **sscritic** » Thu Dec 26, 2013 6:26 pm

Maybe someone can link this one to that other one. [Someone has, see my comments below. --admin LadyGeek]
http://www.bogleheads.org/forum/viewtop ... 1&t=129142

sscritic · Post by **sscritic** » Thu Dec 26, 2013 6:27 pm

Maybe someone can link this one to that other one. [Someone has, see my comments below. --admin LadyGeek]
http://www.bogleheads.org/forum/viewtop ... 0&t=129143

sscritic · Post by **sscritic** » Thu Dec 26, 2013 6:29 pm

Note the similarity. One is number 42 and the other is number 43. Back to back; cool!

sscritic · Post by **sscritic** » Thu Dec 26, 2013 6:29 pm

Note the similarity. One is number 42 and the other is number 43. Back to back; cool!

CyberBob · Post by **CyberBob** » Thu Dec 26, 2013 6:30 pm

Cut-Throat wrote:OK, I'm guessing there is the year end distributions going on here. Except I cannot find any news of this on the Vanguard Website.

Click the Distributions tab on the page for your fund. For example, for Target Retirement 2030: https://personal.vanguard.com/us/funds/ ... =INT#tab=4

Bob

Levett · Post by **Levett** » Thu Dec 26, 2013 6:35 pm

I just bought a car, but what's the ignition switch?

Sorry.

Lev

sscritic · Post by **sscritic** » Thu Dec 26, 2013 6:39 pm

Be nice (this ^^ was originally in the thread started by the poster with 28 posts, not in the thread started by the poster with 1634)

Post by **LadyGeek** » Thu Dec 26, 2013 6:43 pm

Here's why: FYI - It's that time of year again. For new investors, this means it's fund distribution time. The value of your fund will drop by the amount of the dividend.

At sscritic's suggestion, I merged the threads. He said to link them, but I think it's better to combine them into one. I retitled the thread to attract the attention of others with the same question.

The wiki has some background info: Dividend (under "Dividend distributions")

nisiprius · Post by **nisiprius** » Thu Dec 26, 2013 6:45 pm

Stop looking a price charts and start looking at growth charts. Or, if you actually own the fund, just look in your account online.

Some money moved from inside the fund to outside the fund. So the value of the fund shares dropped. If you are reinvesting dividends, the drop in price per share was made up by the fact that you now own more shares.

Post by **LadyGeek** » Thu Dec 26, 2013 6:48 pm

^^^ Here's the example in the wiki:

For example:You own 500 shares at $11 per share at year-end, for a total worth of $5,500. There is a $1 per share dividend. Therefore, net of accumulated dividends in the fund, your fund is worth $10 per share. Assuming dividends are reinvested, you'll get $500 ($1 x 500 shares) reinvested in the fund. $500 / $10 per share = 50 additional shares. Now you own 550 shares at $10 each, which equals your original $5,500.

Cut-Throat · Post by **Cut-Throat** » Thu Dec 26, 2013 6:52 pm

nisiprius wrote:Stop looking a price charts and start looking at growth charts. Or, if you actually own the fund, just look in your account online.

Some money moved from inside the fund to outside the fund. So the value of the fund shares dropped. If you are reinvesting dividends, the drop in price per share was made up by the fact that you now own more shares.

Yes, I actually looked at my Account on-line.....And Vanguard, has not as of now gave me additional shares....And Actually has my account down over $50 Grand.

I know what distributions are and that is why I looked at my account..... There is no additional shares as of now.

BTW - Merging these threads really made readability simple......NOT !!

livesoft · Post by **livesoft** » Thu Dec 26, 2013 6:58 pm

Cut-Throat wrote:I know what distributions are and that is why I looked at my account..... There is no additional shares as of now.

Vanguard has never updated accounts in real-time, so one should have no expectation that anything they show in your account is up-to-date. I think that happens because it keeps their costs low.

Give them a few days to get your account updated or perhaps even longer, say January 15th or so.

sscritic · Post by **sscritic** » Thu Dec 26, 2013 7:05 pm

Cut-Throat:

You purchased shares today at the close with your dividends and cap gains. They will show up tomorrow morning. The same thing happens when you send them money by ACH (electronic fund transfer) or do an exchange from one fund to another.

Have you really never noticed that before?

It's better to have bought your new shares at today's lower price than at yesterday's higher price.

Geologist · Post by **Geologist** » Thu Dec 26, 2013 7:08 pm

Cut-Throat wrote:
Yes, I actually looked at my Account on-line.....And Vanguard, has not as of now gave me additional shares....And Actually has my account down over $50 Grand.

I know what distributions are and that is why I looked at my account..... There is no additional shares as of now.

When the reinvestment occurs and when it is posted online are two different things. I'll bet the additional shares will be there tomorrow morning. You should really feel good; I have another financial provider who posts transactions no sooner than 5 days after they occur.

I'm a geologist...so I recommend taking the long view. Most people pay too much attention. If you had frittered away the first couple of days after Christmas playing with presents or the kids and then looked, you would still have noticed the decrease in share price but the reinvestment would have posted already.

Cut-Throat · Post by **Cut-Throat** » Thu Dec 26, 2013 7:22 pm

Geologist wrote: I'm a geologist...so I recommend taking the long view. Most people pay too much attention. If you had frittered away the first couple of days after Christmas playing with presents or the kids and then looked, you would still have noticed the decrease in share price but the reinvestment would have posted already.

I am a Pagan and Celebrate the Solstice. We opened our presents on Dec. 21st and then were free to re-balance our portfolios yesterday and today.

Professor Emeritus · Post by **Professor Emeritus** » Thu Dec 26, 2013 8:09 pm

Cut-Throat wrote:
Geologist wrote: I'm a geologist...so I recommend taking the long view. Most people pay too much attention. If you had frittered away the first couple of days after Christmas playing with presents or the kids and then looked, you would still have noticed the decrease in share price but the reinvestment would have posted already.
I am a Pagan and Celebrate the Solstice. We opened our presents on Dec. 21st and then were free to re-balance our portfolios yesterday and today.

Christmas is also a winter solstice festival http://www.miltontimmons.com/SolsticeandChristmas.html

Pagans just have better astronomers

telcoguy · Post by **telcoguy** » Thu Dec 26, 2013 9:46 pm

[Thread merged into here. --admin LadyGeek]

This has been a good hybrid fund over the years for me. Why would a stable fund like this drop 8% in one day when the market was up and there was no bad news? This level of volatility is not typical.

SP-diceman · Post by **SP-diceman** » Thu Dec 26, 2013 9:48 pm

...was a dividend paid?

cfs · Post by **cfs** » Thu Dec 26, 2013 9:49 pm

Down 7.98% for distributions

telcoguy · Post by **telcoguy** » Thu Dec 26, 2013 9:54 pm

Thanks I should have seen that.
However, I don't see the dividend transaction in my history. Maybe it will show up tomorrow.

cfs · Post by **cfs** » Thu Dec 26, 2013 9:59 pm

This is what I found on the Vanguard website:

Record date: 24 December 2013
Reinvest date: 26 December 2013
Payable date: 27 December 2013

No problems, you are making a lot of money and hopefully this is not in a taxable account.

Thanks for reading and have a productive 2014.

countdown · Post by **countdown** » Thu Dec 26, 2013 9:59 pm

Thanks to those giving newer investors an explanation regarding the nature of dividends and distributions. We all began at the beginning.

sscritic · Post by **sscritic** » Thu Dec 26, 2013 10:24 pm

telcoguy wrote:Thanks I should have seen that.
However, I don't see the dividend transaction in my history. Maybe it will show up tomorrow.

It will. When you buy a fund with an ACH from your bank, the money hits and you buy the shares one day at the close for that day. The shares show up in your account the next morning. Now I am on the west coast and I know they show up by 6am Pacific time, so 9 am would be the latest you would see them if you live on the East Coast.

I am offering a new no-prize for the first one to report seeing their new shares. 6:00 Eastern, 7:00 Eastern? Let us know. There were two winners Wednesday who first spotted updated prices after the short trading day. This could be your turn!

telcoguy · Post by **telcoguy** » Thu Dec 26, 2013 10:49 pm

Why is the SEC yield only 2.24% when the fund just paid a $1.18 on a $13 share?

Thanks for the education.

sscritic · Post by **sscritic** » Thu Dec 26, 2013 10:57 pm

You should do some things for yourself. Click on the letter B next to 2.24% (not here, there).

SEC yield as of 12/24/2013 2.24% B

Google SEC yield. Look at the distributions page. What is included in SEC yield? Come back and tell us what you have learned.

BigFoot48 · Post by **BigFoot48** » Thu Dec 26, 2013 11:04 pm

Let me be the first to ask. What's VCVSX?

Oh wait, by posting the symbol in my post I can put my cursor over it and read its name. (Doesn't work in titles.)