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Silly mutual fund, tricks are for kids

T

thirtythree

Diamond Member
So I'm invested in the Vanguard Target Retirement 2045 fund, which stays pretty damn close to the S&P 500, but today, the S&P 500 went down .15%, and my fund went down 1.91%! I've never seen more than maybe a .2% difference between the two--what gives? Did something happen with the foreign markets today? Still, VTIVX only has a very small percentage in those. If you scroll down about 3/4 of the way to the target retirement funds, you'll notice a strange pattern:

Target Retirement 2005 ?3.12%
Target Retirement 2010 ?0.95%
Target Retirement 2015 ?2.50%
Target Retirement 2020 ?0.98%
Target Retirement 2025 ?2.24%
Target Retirement 2030 ?0.92%
Target Retirement 2035 ?1.90%
Target Retirement 2040 ?0.88%
Target Retirement 2045 ?1.91%
Target Retirement 2050 ?1.09%

Still, they're pretty bad all across the board. What's it all mean???!?!22111
 
to get that pattern, it must mean they have something in their formula that they change up for the odd years

weird
 
I'm probably going to say something stupid and for that I apologize, but I didn't exactly think this through.

I don't think it matters that it matches the S&P 500 because your mutual funds buys different amounts of those S&P stocks. So the names might be the same but they are not all equally invested.

This seems too simple an explanation and thats why I think I'm missing something here.
 
Cap. Gain and Dividend Payout of the various funds. The value of your fund didn't change since they are reinvested. You just have to pay tax if it's not in a tax deferred account.
 
Wouldn't the Target Retirement 2005 fund be almost entirely bonds? And the bond allocation would drop in later years.
 
Shouldn't the title be "Silly Investor, Mutual Funds are for tricks!"?

Most fund managers can't beat the index...so just buy index ETFs...
 
Originally posted by: JS80
Shouldn't the title be "Silly Investor, Mutual Funds are for tricks!"?

Most fund managers can't beat the index...so just buy index ETFs...
Click to expand...

Most people that are doing dollar cost averaging with a simple $333 a month for their IRA's would get absolutely slaughtered in commissions buying ETF's.
 
Originally posted by: vi_edit
Originally posted by: JS80
Shouldn't the title be "Silly Investor, Mutual Funds are for tricks!"?

Most fund managers can't beat the index...so just buy index ETFs...
Click to expand...

Most people that are doing dollar cost averaging with a simple $333 a month for their IRA's would get absolutely slaughtered in commissions buying ETF's.
Click to expand...

not if you open an account with free commission.
 
Originally posted by: mugs
Wouldn't the Target Retirement 2005 fund be almost entirely bonds? And the bond allocation would drop in later years.
Click to expand...

No, its like 80% stocks and rest in bonds. Towards the retirement date (2045) , its mostly bonds.

Yeah I just purchased the 2045 fund 2 days ago 🙂. I guess the fluctuation could be because of dividends that were paid out, thus lowering the share price? I don't know!
 
Originally posted by: bennylong
Cap. Gain and Dividend Payout of the various funds. The value of your fund didn't change since they are reinvested. You just have to pay tax if it's not in a tax deferred account.
Click to expand...

QFT. This is the time of year that capital gains and dividend payouts occur. The pays out the above, the price is adjusted, and the payouts are then used, assuming you set it up that way (most retirement plans are automatically up to reinvest), to buy more of the shares. The values usually corrects itself the next day.
 
dammit... i just added more money last week to my 2045 account and of course it posted for yesterday's peak price! if only it would've taken an extra day to transfer! 🙁 😛
 
Originally posted by: Oscar1613
dammit... i just added more money last week to my 2045 account and of course it posted for yesterday's peak price! if only it would've taken an extra day to transfer! 🙁 😛
Click to expand...

It this is a capital gains/dividends distribution, it would have made no difference. The value went down for adjustment of the distributions. The distributions are then put right back in (assuming reinvestment) as more shares (at the new cheaper price). You own the same "value" of shares, just more of them since the NAV (price) is now lower.
 
Originally posted by: fallenangel99
Originally posted by: mugs
Wouldn't the Target Retirement 2005 fund be almost entirely bonds? And the bond allocation would drop in later years.
Click to expand...

No, its like 80% stocks and rest in bonds. Towards the retirement date (2045) , its mostly bonds.

Yeah I just purchased the 2045 fund 2 days ago 🙂. I guess the fluctuation could be because of dividends that were paid out, thus lowering the share price? I don't know!
Click to expand...

I was talking about the Target Retirement 2005 fund. 😉
 
You guys are making too much of his comment about it normally being close to the S&P 500... he was just giving that as a frame of reference. He doesn't think it's supposed to track the S&P 500 and (I assume) he doesn't WANT it to track the S&P 500.
 
Yup, just found this page. Dividend reinvested 12/28 (today) and payable 12/29 (tomorrow). The 5-year funds probably went down less because they've only been around for 6 months or so.

I don't think the holdings could make such a big difference. Total stock market is about 71% and bonds are about 10%. That would mean that my foreign funds would've had to go down by 10% on average. Doesn't sound probable, especially if the U.S. market isn't doing worse. And I don't want to track the S&P 500. I was in VFINX before (Vanguard's S&P index), which is why I compare them from time to time. VTIVX offers more diversity with no fees (vs. a $10/year fee with VFINX). VTIVX has also slightly outperformed VFINX thus far (link), and I don't think it's actively managed. EDIT: I mean the even year funds, not the 5 year ones. 2045 was around for a while before 2040, 2050, etc.
 
Originally posted by: thirtythree
So I'm invested in the Vanguard Target Retirement 2045 fund, which stays pretty damn close to the S&P 500, but today, the S&P 500 went down .15%, and my fund went down 1.91%! I've never seen more than maybe a .2% difference between the two--what gives? Did something happen with the foreign markets today? Still, VTIVX only has a https://flagship.vanguard.com/VGApp/hnw/FundsHoldings?FundId=0306&FundIntExt=INT">very small percentage</a> in those. If you scroll down about 3/4 of the way to the https://flagship.vanguard.com/VGApp/hnw/FundsByName">target retirement funds</a>, you'll notice a strange pattern:

Target Retirement 2005 ?3.12%
Target Retirement 2010 ?0.95%
Target Retirement 2015 ?2.50%
Target Retirement 2020 ?0.98%
Target Retirement 2025 ?2.24%
Target Retirement 2030 ?0.92%
Target Retirement 2035 ?1.90%
Target Retirement 2040 ?0.88%
Target Retirement 2045 ?1.91%
Target Retirement 2050 ?1.09%

Still, they're pretty bad all across the board. What's it all mean???!?!22111
Click to expand...

It's inevitable to see fluctuation from day to day..as long as it's not seen over longer periods of time you should be fine.

I believe in all of history, only 40 fund managers have ever beaten the s&p for 8 years straight, so as long as you're within spec of the index I wouldn't worry..
 
Originally posted by: iversonyin
Index fund investing > mutual funds....silly rabbit...
Click to expand...
My fund is composed of five index funds. Diversity is good too, right? Besides, as mentioned, my fund has been doing slightly better than the S&P since its inception (3 or so years ago). It's a pretty safe mix of stocks. I don't think it's ever going to vary too much from the S&P till it starts getting more conservative, several years down the road.

And if you also didn't read, it went down because of dividend reinvestment. My portfolio is back to what it should be today.
 
Originally posted by: thirtythree
Originally posted by: iversonyin
Index fund investing > mutual funds....silly rabbit...
Click to expand...
My fund is composed of five index funds. Diversity is good too, right? Besides, as mentioned, my fund has been doing slightly better than the S&P since its inception (3 or so years ago). It's a pretty safe mix of stocks. I don't think it's ever going to vary too much from the S&P till it starts getting more conservative, several years down the road.

And if you also didn't read, it went down because of dividend reinvestment. My portfolio is back to what it should be today.
Click to expand...

How about expense ratio? and 12-b fees? I don't buy mutual funds, but I'm wondering if you are still ahead after the fees that they charge.

There are only handful of funds that can beat the S&P consistently. Even Bill Miller failed this year...the guy had a nice streak going tho.
 
Originally posted by: iversonyin
Originally posted by: thirtythree
Originally posted by: iversonyin
Index fund investing > mutual funds....silly rabbit...
Click to expand...
My fund is composed of five index funds. Diversity is good too, right? Besides, as mentioned, my fund has been doing slightly better than the S&P since its inception (3 or so years ago). It's a pretty safe mix of stocks. I don't think it's ever going to vary too much from the S&P till it starts getting more conservative, several years down the road.

And if you also didn't read, it went down because of dividend reinvestment. My portfolio is back to what it should be today.
Click to expand...

How about expense ratio? and 12-b fees? I don't buy mutual funds, but I'm wondering if you are still ahead after the fees that they charge.

There are only handful of funds that can beat the S&P consistently. Even Bill Miller failed this year...the guy had a nice streak going tho.
Click to expand...
No fees for my fund. There was a $10/year fee for the S&P index, but that wouldn't apply next year. The expense ratio for my fund is .21% vs. .18% for the S&P index. If the 3-year returns stick (not saying they will, but that's the longest time-span available for my fund), and I let my current $9000 sit in my Roth IRA (I just started investing November of last year, and I just started getting employee retirement benefits this month), I'd have $246,796 in 30 years vs. $162,266 with the S&P index. That's taking expense ratios into account.

If the performance does start to waver, I can always move into something else. I'll probably move into a couple different funds anyway once I have enough invested to do so without any fees.
 
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