[Why did my fund suddenly drop in value?]

[tibbitts]

I looked on the Internet and I cannot find what "***** ********" is, but I can guess. (Item in quotes changed to protect the innocent.)

I have owned VWILX's little brother VWIGX in a taxable account for many years, and while the big "payout" is not particularly welcome, it's way better than a loss. The big Tesla run-up in the past year is almost certainly the villain, but it was wearing a clown nose and honking a horn as it went up. Very entertaining.

I got it! The payout is welcome for me. I thought the ex-dividend date was later in the month. I should have checked there first.

Well, if you mean the payout is welcome vs. the fund just dropping, that's probably appropriate. Otherwise it's kind of a non-event in a tax-advantaged account.

[an_asker]

Apparently the fudge farkled for this fund. Please read this:
viewtopic.php?f=1&t=364847

I received a message that I am not entitled to read this thread.

That message "You are not authorized to read this forum" shows up when the forum moderators are doing something with that thread. Possibly they're merging it with another thread, or some other admin-y thing.

Check that link again in 30 minutes.

I guess the title of that thread violates forum policy and the OP's got banned.

Some poor soul made a reference to a football team in the northeast but got his initials mixed up

[LadyGeek]

I want to mention that Fidelity has a good tutorial on their fund distribution website page: Distributions by Fidelity Mutual Funds

Mutual funds that have net gains from the sale of securities, or that earn dividends and interest from securities they hold, are required by law to pass the largest possible portion of those earnings to shareholders...

Why does it look like value of my account went down?

If dividends and capital gains are paid out, it reduces the price of shares, or the net asset value (NAV) of mutual funds. This means the closing price of the investment will drop by the amount that is paid out on the Ex Dividend Date (Ex. Date), even though the payment will happen in the future (Pay Date). The total account value is unaffected.

Distributions that aren't set to pay into a core account will be reinvested, and the number of shares in the account will increase...

[Triple digit golfer]

Help a dummy here.

Vanguard FTSE all-world Ex-US Index (VFWAX) record date shows 12/16/21, reinvest date 12/17/21, and payable date 12/20/21.

If I invest today (12/17/21) before close of business, I'm not "buying the dividend," correct? In other words, today should be the day that the price drops.

Do I have that right and do I have Boglehead approval to proceed with a large purchase?

[lstone19]

Help a dummy here.

Vanguard FTSE all-world Ex-US Index (VFWAX) record date shows 12/16/21, reinvest date 12/17/21, and payable date 12/20/21.

If I invest today (12/17/21) before close of business, I'm not "buying the dividend," correct? In other words, today should be the day that the price drops.

Do I have that right and do I have Boglehead approval to proceed with a large purchase?

Yes, you are correct. You had to own it at end of market day on 12/16 to receive the dividend. The price will drop today and those reinvesting dividends will have them reinvested at today’s price. Those receiving the dividend in cash will have it paid Monday.

[Triple digit golfer]

Help a dummy here.

Vanguard FTSE all-world Ex-US Index (VFWAX) record date shows 12/16/21, reinvest date 12/17/21, and payable date 12/20/21.

If I invest today (12/17/21) before close of business, I'm not "buying the dividend," correct? In other words, today should be the day that the price drops.

Do I have that right and do I have Boglehead approval to proceed with a large purchase?

Yes, you are correct. You had to own it at end of market day on 12/16 to receive the dividend. The price will drop today and those reinvesting dividends will have them reinvested at today’s price. Those receiving the dividend in cash will have it paid Monday.

Thank you for confirming.

[drumboy256]

VASGX just hit today.

[greenway23]

Today VXUS was up .64% while VTIAX was only up .26%. In the past I have seen this around the dividend date but this fund’s last quarterly dividend was in mid December. Anyone have an explanation for this?

[sidneyinplanning]

Today VXUS was up .64% while VTIAX was only up .26%. In the past I have seen this around the dividend date but this fund’s last quarterly dividend was in mid December. Anyone have an explanation for this?

Yes this time is unusual. The NPV of most funds still jumped after dividend distribution but suddenly dropped after Jan 4.

[Ocean77]

One question I have on this topic:

Let's say I purchase a fund for $100. So my cost basis is $100. Right after that, the fund distributes $10, and therefore drops to $90. Let's say I have set it up to reinvest distributions. So now my cost basis becomes $110, correct? Even though I only put $100 into the fund? And with that reinvestment, my fund holding would go back up to $100. But since my cost basis is now $110, it would show this position at a loss of $10, correct?

[lstone19]

One question I have on this topic:

Let's say I purchase a fund for $100. So my cost basis is $100. Right after that, the fund distributes $10, and therefore drops to $90. Let's say I have set it up to reinvest distributions. So now my cost basis becomes $110, correct? Even though I only put $100 into the fund? And with that reinvestment, my fund holding would go back up to $100. But since my cost basis is now $110, it would show this position at a loss of $10, correct?

Basically yes. The basis on the original shares remains $100. The basis of the shares purchased by reinvesting the distribution is $10. If you then sold all of it and received $100, you'd now have a $10 taxable distribution and a $10 capital loss.

[Ocean77]

One question I have on this topic:

Let's say I purchase a fund for $100. So my cost basis is $100. Right after that, the fund distributes $10, and therefore drops to $90. Let's say I have set it up to reinvest distributions. So now my cost basis becomes $110, correct? Even though I only put $100 into the fund? And with that reinvestment, my fund holding would go back up to $100. But since my cost basis is now $110, it would show this position at a loss of $10, correct?

Basically yes. The basis on the original shares remains $100. The basis of the shares purchased by reinvesting the distribution is $10. If you then sold all of it and received $100, you'd now have a $10 taxable distribution and a $10 capital loss.

Thank you! I had kind of figured this, but it felt "strange" so I wanted to confirm it. I had always thought that the gain or loss that Fidelity shows me online next to each fund holding tells me exactly how much money so far I have gained or lost in that position. In fact that is not the case at all. I.e. in the example I made above, I did not lose a penny in that fund, but the broker would show a loss of $10. I had not realized until now that it worked like this.

[dbr]

One question I have on this topic:

Let's say I purchase a fund for $100. So my cost basis is $100. Right after that, the fund distributes $10, and therefore drops to $90. Let's say I have set it up to reinvest distributions. So now my cost basis becomes $110, correct? Even though I only put $100 into the fund? And with that reinvestment, my fund holding would go back up to $100. But since my cost basis is now $110, it would show this position at a loss of $10, correct?

Basically yes. The basis on the original shares remains $100. The basis of the shares purchased by reinvesting the distribution is $10. If you then sold all of it and received $100, you'd now have a $10 taxable distribution and a $10 capital loss.

Thank you! I had kind of figured this, but it felt "strange" so I wanted to confirm it. I had always thought that the gain or loss that Fidelity shows me online next to each fund holding tells me exactly how much money so far I have gained or lost in that position. In fact that is not the case at all. I.e. in the example I made above, I did not lose a penny in that fund, but the broker would show a loss of $10. I had not realized until now that it worked like this.

And that is in order to keep your taxes straight. But distributions, gains, losses, as they are entered in your current or future tax returns are not the same thing as tracking your investments. Tracking the fund NAV doesn't do the job either, which is why fund companies have to also publish return data. And that also does not do the job because you may not hold the fund for a full period of time as a constant investment, so you have to calculate a "personal" return to know what happened. Or, even simpler, just look at how much money you have.

[Ocean77]

One question I have on this topic:

Let's say I purchase a fund for $100. So my cost basis is $100. Right after that, the fund distributes $10, and therefore drops to $90. Let's say I have set it up to reinvest distributions. So now my cost basis becomes $110, correct? Even though I only put $100 into the fund? And with that reinvestment, my fund holding would go back up to $100. But since my cost basis is now $110, it would show this position at a loss of $10, correct?

Basically yes. The basis on the original shares remains $100. The basis of the shares purchased by reinvesting the distribution is $10. If you then sold all of it and received $100, you'd now have a $10 taxable distribution and a $10 capital loss.

Thank you! I had kind of figured this, but it felt "strange" so I wanted to confirm it. I had always thought that the gain or loss that Fidelity shows me online next to each fund holding tells me exactly how much money so far I have gained or lost in that position. In fact that is not the case at all. I.e. in the example I made above, I did not lose a penny in that fund, but the broker would show a loss of $10. I had not realized until now that it worked like this.

And that is in order to keep your taxes straight. But distributions, gains, losses, as they are entered in your current or future tax returns are not the same thing as tracking your investments. Tracking the fund NAV doesn't do the job either, which is why fund companies have to also publish return data. And that also does not do the job because you may not hold the fund for a full period of time as a constant investment, so you have to calculate a "personal" return to know what happened. Or, even simpler, just look at how much money you have.

Makes sense, thanks!

It would certainly be nice though if the brokerage would do this personal return calculation for me as well. They (Fidelity anyway) already do that for the entire portfolio, but not per fund.

[Atlinvest]

I was impacted by the capital gain distribution in the target date 2040 fund, held in a taxable account unfortunately. Using round numbers, for $100k holding I was hit with $15k long term capital gain.

As some have noted above, this now creates and unrealized capital loss in the account. Is it accurate to say that I can sell the full $100k holding now, generate capital losses, and replace with the same underlying mix of holdings (probably switch to ETFs for the stock and bond holding), then just apply these capital losses to offset future capital gains? I want to get out of this target fund due to the uncontrolled tax treatment, so that seems like the best option.

Thanks

[LadyGeek]

Welcome! The ongoing discussion is here: Target date funds ... so much for "set and forget" [and WSJ article]

If you need assistance with your portfolio, may I suggest you start a new thread in the Personal Investments forum and post your portfolio information in that thread using the Asking Portfolio Questions format? It will make you think about the "big picture" while giving us the information we need to point you in the right direction.

If you have any questions, ask them in the new thread.

[vrr106]

I was impacted by the capital gain distribution in the target date 2040 fund, held in a taxable account unfortunately. Using round numbers, for $100k holding I was hit with $15k long term capital gain.

As some have noted above, this now creates and unrealized capital loss in the account. Is it accurate to say that I can sell the full $100k holding now, generate capital losses, and replace with the same underlying mix of holdings (probably switch to ETFs for the stock and bond holding), then just apply these capital losses to offset future capital gains? I want to get out of this target fund due to the uncontrolled tax treatment, so that seems like the best option.

Thanks

I did exactly this in 2022 - the target date both had higher expenses and was resulting in cap gains. Just make sure you calculate the loss/gain, in my case I had enough losses from other sources to offset any gains

[Whakamole]

Vanguard is starting to post dividends for June. Some US ETFs (VTI) haven't been posted yet, but mutual funds and foreign ETFs are set.

[jebmke]

Vanguard is starting to post dividends for June. Some US ETFs (VTI) haven't been posted yet, but mutual funds and foreign ETFs are set.

none of my US MFs have declared

[livesoft]

Quarterly dividends are starting to show up as many ticker symbols start going ex-dividend today and this week.

[UpperNwGuy]

Good to know. I looked up the dividend payment schedules for Vanguard, BlackRock, and Schwab and was surprised to see several ETFs not paying out their September dividends until early October. In my case that would be VOO and ITOT.