Total return from a bond fund.

[utrecht]

How do you figure the total return of a bond fund? If you buy the fund at a NAV of 10 and at the end of the year the NAV is 10.50, can you just add that 5% return to whatever the yield is? So if the fund says it has a 5% yield, did you get a 10% return for the year?

[brewer12345]

The total return depends on what you assume about the coupon and when you got it. So if you bought at 10 and got 50 cents in interest on March 31 and reinvested it in the fund, you have one total return #. If you bought at 10, got 50 cents on 12/31 and left the coupon in a money market fund, you got a different total return.

[utrecht]

I dont underdstand bond funds at all so I dont know what a "coupon" is. Can you put it into laymans terms for me?

I recently added Pimco Total Return fund to my portfolio and I want to know what my return is at any given time. It has a current yeild of 5.11% and a NAV of 10.63

If I invested $100,000, will I be getting $5110 in interest in a one year period? (Interest will be reinvested in the fund inside my 401k). Can I add that to whatever the increase in NAV is at the end of one year? Or am I looking at this all wrong?

[brewer12345]

Coupon is the interest the bonds in the funds throw off.

Assuming that yield doesn't change over the course of the year (it will), yes, you would get about $5110 interest that will be reinvested. You can ad it to NAV. Simple way to see total return: at the end of the year, what you have minus what you paid divided by what you paid is your return.

[lsbcal]

This may give you all you want. It's the M* total return numbers. You will have to put in the ticker for the Pimco Total Return you purchased since there are many flavors of this, I chose PTTAX here:
PIMCO Total Return A Report (PTTAX) | Total Returns

Or if you really want to do the calculation go to Yahoo historical prices:
PTTAX: Historical Prices for PIMCO FUNDS TOTAL RETURN FUND C - Yahoo! Finance
Use the adjusted prices to the right which are adjusted for distributions (dividends).

[ziggy29]

Originally Posted by utrecht

How do you figure the total return of a bond fund? If you buy the fund at a NAV of 10 and at the end of the year the NAV is 10.50, can you just add that 5% return to whatever the yield is? So if the fund says it has a 5% yield, did you get a 10% return for the year?

This oversimplifies the underlying math, but adding the percentage gain in NAV plus the percentage in interest earned in the year is a pretty decent estimate.

As mentioned already, just see what happens to your position over the course of a year (very easy if you don't buy or sell shares in the period). If you started the year with $10,000 in a bond fund and you ended it with $10,632, your total return was 6.32% annualized.

[utrecht]

Is there any place on the Morningstar site that shows when these bond funds actually pay out the interest? Are they all monthly, quarterly? All different?

[CitricAcid]

Not sure about Morningstar, but I am sure you can look up the bond fund on google finance, yahoo finance, marketwatch or whatever else you use, bring up a chart and click dividends and it will tell you the amount and when they were paid.

[utrecht]

I realize that I can easily figure my total return at the end of the year by using my starting and ending numbers, but how is the total return figured at any given point in time when the interest is only paid monthly or quarterly.

I can look at Morningstar or any number of other finance sites right now and see what the total return for any bond fund is YTD. I guess my question is how do they calculate that number in the middle of the period. I need to know that so I can set up my spreadsheet to calculate my returns and any point that I want to check it just like I can do with stock funds or individual stocks.

[kaneohe]

Seems like the calculation would be the same as what you are doing for stock funds since, in general, they would be be paying distributions during the year, tho perhaps less frequently than a bond fund. For the YTD return, can't you take the NAV and # shares (which keep changing as you reinvest during the year) to get your total value at any point in time. Then treat as you did at year end......subtract starting value to get increase(decrease) and divide by starting value to get YTD return (this is not annualized). This would be a bit of pain keeping up w/ the changing number of shares.

[CitricAcid]

If you are talking about a bond fund, I would treat it just like any other fund, comparing the price now to the price when you bought it (or at the beginning of the year or whenever) and dividing by the original price. Also add in dividends in your return and you got your total return.