Is Vanguard's "unrealized gain/loss" calculation screwy?
If you have an account with Vanguard, their website will show you the "unrealized gain/loss" associated with each fund you hold in a taxable account. They calculate this as (current market value) - (total cost of shares). This sounds reasonable, but looking at some of my funds, it seems that the loss they're showing is much greater than it should be (I made a lot of purchases over the last two years before things headed down).
It looks like the reason the loss they show is greater than I'd expect because they count all reinvested dividends and capital gains in your total cost of shares. But if the fund makes a distribution, it didn't really "cost" me anything - so this seems to be inflating my cost of shares. For example, if I buy $100 worth of a fund, and at the end of the year the price is the same, then they distribute a $2 capital gain that is reinvested, Vanguard would show my cost of shares at $102 but the value of my holdings is still only $100, so they would show a $2 unrealized loss. But from my perspective, I haven't really lost anything - I paid $100 and the fund is still worth $100.
Has anyone else experienced this? Am I missing something?