[Why did my fund suddenly drop in value?]

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ram
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Re: [Why did my fund suddenly drop in value?]

Post by ram » Mon Dec 18, 2017 8:37 pm

VWIAX (Wellesly admiral) "dropped" about 2% today. It is in my Roth with dividend to be reinvested. It should all show up in the next 2-3 days.
Ram

Wakefield1
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Re: [Why did my fund suddenly drop in value?]

Post by Wakefield1 » Tue Dec 19, 2017 11:11 am

ram wrote:
Mon Dec 18, 2017 8:37 pm
VWIAX (Wellesly admiral) "dropped" about 2% today. It is in my Roth with dividend to be reinvested. It should all show up in the next 2-3 days.
About 11:00 AM Dec. 19-the money has reappeared overnight after disappeared yesterday

I guess if you tried to sell or exchange during the phantom period you could run into problems!

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randomizer
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Re: [Why did my fund suddenly drop in value?]

Post by randomizer » Tue Dec 19, 2017 11:14 am

Hello, December, my old friend...
87.5:12.5, EM tilt — HODL the course!

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ram
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Re: [Why did my fund suddenly drop in value?]

Post by ram » Tue Dec 19, 2017 7:43 pm

As Wakefield noted above it has reappeared within 24 hours.
Ram

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Portfolio7
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Re: My Fund is Down?! IT'S DISTRIBUTION TIME!!!

Post by Portfolio7 » Thu Dec 28, 2017 7:01 pm

livesoft wrote:
Fri Dec 30, 2011 5:43 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.
For decades I was (e), but this year I've been having fun getting a visceral feel for volatility (or lack thereof.) I guess I tripped C) (except I read something wrong about the dist date), D) (but wanted to understand it better) and A) (because while I know it was supposed to happen, I wasn't familiar with the step-by-step process.) I was thinking my NAV per share would simply drop, shares increase, net change would be zero. Instead you get a big negative return, a day passes, and then the reinvestment makes you whole.
An investment in knowledge pays the best interest.

Wakefield1
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Re: [Why did my fund suddenly drop in value?]

Post by Wakefield1 » Tue Jan 23, 2018 11:53 pm

Now some of my funds will truly drop in value at distribution time: I need a little more income (building up my possible housebuying/downpayment war chest) so I reconfigured some of my Vanguard taxable account funds to pay dividends to my Credit Union account instead of reinvesting them (you can do it on your logged in Vanguard web access and do it individually for your various funds (you can leave some of them on reinvest or reinvest only dividends vs. capital gains)

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oldzey
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey » Wed Mar 14, 2018 11:20 am

Well, it's that time again: viewtopic.php?f=10&t=244260
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

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oldzey
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey » Wed Jun 13, 2018 12:55 pm

"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

Whakamole
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Re: [Why did my fund suddenly drop in value?]

Post by Whakamole » Wed Sep 12, 2018 10:39 am

Happy September, everyone. Distributions should start hitting next week: https://investornews.vanguard/upcoming- ... formation/

Declaration dates for popular funds:

September 20th: Wellesley, Wellington
September 24th: S&P 500, most International funds, Extended Market, Total World
September 26th: Balanced, Total Stock

montanagirl
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Re: [Why did my fund suddenly drop in value?]

Post by montanagirl » Wed Dec 19, 2018 10:05 am

Did wellesley post an unusually large cap gains distribution today??

AerialWombat
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Re: [Why did my fund suddenly drop in value?]

Post by AerialWombat » Wed Dec 19, 2018 10:20 am

montanagirl wrote:
Wed Dec 19, 2018 10:05 am
Did wellesley post an unusually large cap gains distribution today??
Yes. $1.04 long term capital gain distribution. That’s 5x normal. Payable date is today.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

zvez
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Re: [Why did my fund suddenly drop in value?]

Post by zvez » Mon Feb 25, 2019 6:09 pm

and again, it seems a glitch with share price on vanguard funds. VTWNX down $1.87 a share. Hope it's a mistake anyway.

zvez
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Re: [Why did my fund suddenly drop in value?]

Post by zvez » Mon Feb 25, 2019 6:21 pm

never mind, they fixed it.

rongos
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Re: [Why did my fund suddenly drop in value?]

Post by rongos » Tue Mar 12, 2019 12:41 pm

How does a distribution work for money market funds that maintain a $1.00 NAV?

When such a fund makes a distribution, do they maintain a $1.00 NAV throughout?

If so, if there's a regular monthly distribution, what's to keep an investor from timing the distributions?

livesoft
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Re: [Why did my fund suddenly drop in value?]

Post by livesoft » Tue Mar 12, 2019 12:57 pm

rongos wrote:
Tue Mar 12, 2019 12:41 pm
How does a distribution work for money market funds that maintain a $1.00 NAV?

When such a fund makes a distribution, do they maintain a $1.00 NAV throughout?

If so, if there's a regular monthly distribution, what's to keep an investor from timing the distributions?
Money market funds and some bond funds accrue the monthly dividend in a separate unseen place much like a savings account at a bank accrues interest.

If one sells shares before the end of the month, then the sold shares no longer accrue a dividend for the owner that sold them and at the end of the month when the monthly dividend is paid, one receives less of a dividend than if they had not sold the shares.

If one buys shares before the end of the month, then the bought shares accrue a dividend for the owner that bought them for the remainder of the month and at the end of the month when the monthly dividend is paid, the owner receives more of dividend than if they had not bought the shares.

In any event, there is no arbitrage (timing) that an investor can do to screw another investor out of their fair share of dividend.
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rongos
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Re: [Why did my fund suddenly drop in value?]

Post by rongos » Tue Mar 12, 2019 1:16 pm

Thank you, livesoft, for the answer. An hour of googling could not answer what you said just minutes after my posting. (Bogleheads is awesome :-)

Just one more question.
livesoft wrote:If one sells shares before the end of the month, then the sold shares no longer accrue a dividend for the owner that sold them and at the end of the month when the monthly dividend is paid, one receives less of a dividend than if they had not sold the shares.
In such a case, if an investor sells all their shares in the money market fund and no longer owns the fund, does the investor still receive a distribution at the end of the month of their accrued interest? It seems odd that one can still receive a distribution for a fund they no longer own.

livesoft
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Re: [Why did my fund suddenly drop in value?]

Post by livesoft » Tue Mar 12, 2019 2:45 pm

rongos wrote:
Tue Mar 12, 2019 1:16 pm
In such a case, if an investor sells all their shares in the money market fund and no longer owns the fund, does the investor still receive a distribution at the end of the month of their accrued interest? It seems odd that one can still receive a distribution for a fund they no longer own.
If one sells all their shares and no longer owns any shares of the fund, then the money market fund manager will pay out the accrued dividend when all the shares are sold. So the investor still receives the accrued distribution, but before the end of the month. I believe this is also the way savings accounts work.
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oldzey
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey » Fri Mar 15, 2019 7:47 am

"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

Wakefield1
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Re: [Why did my fund suddenly drop in value?]

Post by Wakefield1 » Fri Mar 29, 2019 6:16 pm

oldzey wrote:
Fri Mar 15, 2019 7:47 am
Yes folks, it's that time again:

Find out if your fund is declaring a dividend this month
Looks like VGHAX sneezed today. Zombie $ to reappear on April Fools" Day?
Glad that thing is in my Roth and not in my taxable!

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oldzey
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey » Tue Jun 11, 2019 2:11 am

Well, it's that time again - here's the latest information from Vanguard:

"Find out if your fund is declaring a dividend this month"
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

S_Track
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Re: [Why did my fund suddenly drop in value?]

Post by S_Track » Tue Jun 11, 2019 9:30 am

I understand why a funds NAV drops after a distribution but is the same true when you hold individual stock. For example say you own stock in Company Z and it pay a 2% Dividend, does the share price also drop by 2%? If yes, how does that work if its the market that determines stock price? Thanks

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MNGopher
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Re: [Why did my fund suddenly drop in value?]

Post by MNGopher » Tue Jun 11, 2019 9:35 am

S_Track wrote:
Tue Jun 11, 2019 9:30 am
I understand why a funds NAV drops after a distribution but is the same true when you hold individual stock. For example say you own stock in Company Z and it pay a 2% Dividend, does the share price also drop by 2%? If yes, how does that work if its the market that determines stock price? Thanks
It probably won't drop by exactly 2%. The dividend payout is just one of many factors that affect the stock price on a daily basis.

dbr
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Re: [Why did my fund suddenly drop in value?]

Post by dbr » Tue Jun 11, 2019 10:10 am

MNGopher wrote:
Tue Jun 11, 2019 9:35 am
S_Track wrote:
Tue Jun 11, 2019 9:30 am
I understand why a funds NAV drops after a distribution but is the same true when you hold individual stock. For example say you own stock in Company Z and it pay a 2% Dividend, does the share price also drop by 2%? If yes, how does that work if its the market that determines stock price? Thanks
It probably won't drop by exactly 2%. The dividend payout is just one of many factors that affect the stock price on a daily basis.
Exactly, even as the value a share should price at goes down the market is already pricing the share up and down constantly. I believe it is true that one can see the effect of the dividend in the opening price set by the market overnight. Someone may explain the ins and outs of that.

People have written papers that try to extract an observation of the effect of dividend on share prices against constant market noise, and the drop is there.

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Re: [Why did my fund suddenly drop in value?]

Post by S_Track » Tue Jun 11, 2019 11:00 am

dbr wrote:
Tue Jun 11, 2019 10:10 am
MNGopher wrote:
Tue Jun 11, 2019 9:35 am
S_Track wrote:
Tue Jun 11, 2019 9:30 am
I understand why a funds NAV drops after a distribution but is the same true when you hold individual stock. For example say you own stock in Company Z and it pay a 2% Dividend, does the share price also drop by 2%? If yes, how does that work if its the market that determines stock price? Thanks
It probably won't drop by exactly 2%. The dividend payout is just one of many factors that affect the stock price on a daily basis.
Exactly, even as the value a share should price at goes down the market is already pricing the share up and down constantly. I believe it is true that one can see the effect of the dividend in the opening price set by the market overnight. Someone may explain the ins and outs of that.

People have written papers that try to extract an observation of the effect of dividend on share prices against constant market noise, and the drop is there.
That is interesting, so if you remove the market noise, who assigns the drop due to the distribution?

alex_686
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Re: [Why did my fund suddenly drop in value?]

Post by alex_686 » Tue Jun 11, 2019 11:10 am

S_Track wrote:
Tue Jun 11, 2019 11:00 am
That is interesting, so if you remove the market noise, who assigns the drop due to the distribution?
The market. From a strategic level the company's value must fall by exactly as much as distributed. From a tactical level there are a number of arbitrage trades one can do to make risk free money if it does not drop. I suspect that arbitrage trades is the answer to your question.

dbr
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Re: [Why did my fund suddenly drop in value?]

Post by dbr » Tue Jun 11, 2019 11:11 am

S_Track wrote:
Tue Jun 11, 2019 11:00 am
dbr wrote:
Tue Jun 11, 2019 10:10 am
MNGopher wrote:
Tue Jun 11, 2019 9:35 am
S_Track wrote:
Tue Jun 11, 2019 9:30 am
I understand why a funds NAV drops after a distribution but is the same true when you hold individual stock. For example say you own stock in Company Z and it pay a 2% Dividend, does the share price also drop by 2%? If yes, how does that work if its the market that determines stock price? Thanks
It probably won't drop by exactly 2%. The dividend payout is just one of many factors that affect the stock price on a daily basis.
Exactly, even as the value a share should price at goes down the market is already pricing the share up and down constantly. I believe it is true that one can see the effect of the dividend in the opening price set by the market overnight. Someone may explain the ins and outs of that.

People have written papers that try to extract an observation of the effect of dividend on share prices against constant market noise, and the drop is there.
That is interesting, so if you remove the market noise, who assigns the drop due to the distribution?
It's still the market, but what we mean by that is a systematic offset combined with whatever underlying price trend might be going on combined with the remaining variation which is assigned to noise. Actually one paper I read seemed to be able to support the idea that the price drop was actually the after tax value of the shares after making an attempt to ascertain the overall tax cost (gain or loss) to the pool of investors they imagined to comprise the market. As far as before opening price setting, see here: https://finance.zacks.com/stock-price-c ... -3571.html

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Re: [Why did my fund suddenly drop in value?]

Post by Phineas J. Whoopee » Tue Jun 11, 2019 12:15 pm

S_Track wrote:
Tue Jun 11, 2019 11:00 am
...
That is interesting, so if you remove the market noise, who assigns the drop due to the distribution?
There is no central pricing authority, therefore there is nobody to assign any such thing.

Uninformed investors can get taken advantage of by those who understand the dividend dynamic. That's why the major exchanges adjust limit orders left open overnight just before the ex-dividend date. They're not assigning a drop. They're just protecting the marks from the sharps.

By accounting convention the market price is whatever the most eager seller and most eager buyer most recently agreed to. Placers of market orders take what they get. Placers of limit orders have to agree with each other in order to trade.

Equity markets are driven by limit orders. The institutional investors, who account for most daily volume, adjust their own limits, taking into account anything they want in addition to a dividend.

Domestic end-of-day equity mutual fund prices account for the most recent trades (the last daily one per security while its exchange is open).

PJW
Last edited by Phineas J. Whoopee on Tue Jun 11, 2019 1:13 pm, edited 1 time in total.

S_Track
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Re: [Why did my fund suddenly drop in value?]

Post by S_Track » Tue Jun 11, 2019 1:12 pm

Phineas J. Whoopee wrote:
Tue Jun 11, 2019 12:15 pm
S_Track wrote:
Tue Jun 11, 2019 11:00 am
...
That is interesting, so if you remove the market noise, who assigns the drop due to the distribution?
There is no central pricing authority, therefore there is nobody to assign any such thing.

Uninformed investors can get taken advantage of by those who understand the dividend dynamic. That's why the major exchanges adjust limit orders left open overnight just before the ex-dividend date. They're not assigning a drop. They're just protecting the marks from the sharps.

By accounting convention the market price is whatever the most eager seller and most eager buyer most recently agreed to. Placers of market orders take what they get. Placers of limit orders have to agree with each other in order to trade.

Equity markets are driven by limit orders. The institutional investors, who account for most daily volume, adjust their own, taking into account anything they want in addition to a dividend.

Domestic end-of-day equity mutual fund prices account for the most recent trades (the last daily one per security while its exchange is open).

PJW
Thank you for the detailed explanation.

theplayer11
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Re: [Why did my fund suddenly drop in value?]

Post by theplayer11 » Mon Jun 24, 2019 10:17 am

why would vti be down .28% with both s&p 500 and nasdaq both up? I don't think I've seen this before.

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