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Very dumb question
Old 11-02-2009, 10:11 AM   #1
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Very dumb question

When I look at "YTD Return" on Yahoo MF quote, does that return include dividends or does it just reflect the change in market price?

I thought it included any dividends, but got confused when researching VFIAX. I know I'm making a very basic mistake here, so please help me out.

The price of VFIAX on 12/31/08 was $81.60, on 9/30/09 it was $97.45 or a 19.42% increase in share price. During that same period VFIAX also paid out $1.51 in dividends or 1.8%. That would make the total return on 21.22%.

Looking at the S&P over the same period it increased by only 17.03% (903.25 to 1057.08). That's a 4.19% difference! Now I know the S&P didn't pay out 4+ % dividend and VFIAX can't be beating the index by that much. What am I missing?

Thanks in advance for setting me straight.
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Old 11-02-2009, 03:07 PM   #2
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Not a dumb question at all. As best I can determine most of the free resource on the net do include dividends when calculating "returns". However, there are many exceptions which just include share price growth.

Also if you ever talk to an equity index annuity salesman they almost never will include dividends
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Old 11-02-2009, 08:10 PM   #3
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It's really togh to find a good source of total returns, especially as a chart.

Morningstar lists total returns, which will include reinvestment of dividends and capitial gains. You can guess a little at Yahoo if you look at the "adjusted" historical prices for MF's, but they have not been reliable in my experience, perhaps including only dividends and not capital gains or just missing a distribution.

You can also get total return data from Fidelity, though it's usually just 1, 3, 5, 10 year numbers.
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Old 11-02-2009, 10:59 PM   #4
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Quote:
Originally Posted by moguls View Post
The price of VFIAX on 12/31/08 was $81.60, on 9/30/09 it was $97.45 or a 19.42% increase in share price. During that same period VFIAX also paid out $1.51 in dividends or 1.8%. That would make the total return on 21.22%.
The price of VFIAX on 12/31/08 was $83.09, not $81.60. If you use the Adj Close and you add $1.51 in dividends, you are double counting the dividends.
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Old 11-03-2009, 09:21 AM   #5
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Thanks thefinancebuff, I knew I was overlooking something. You nailed it!
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Old 11-03-2009, 09:34 AM   #6
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Quote:
Originally Posted by clifp View Post
Also if you ever talk to an equity index annuity salesman they almost never will include dividends
Maybe it just gets "morphed" into the insurer's cut of the "participation rate" pie.........
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Old 11-03-2009, 12:03 PM   #7
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Thanks thefinancebuff, I knew I was overlooking something. You nailed it!
Make sure you do NOT use adj. close for calculating total return. That is incorrect.
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