[GreatLaker]

OP was asking about returns … gains are not the same thing.

Yup. To see investment return including distributions and accrued interest in WebBroker, look at the Performance tab, not the Gain & Loss tab.

To open a help screen in WebBroker, there is a ❔ icon under the Print icon near the top right of most screens. But we are men, we never read help or ask directions right?

 

[GreatLaker]

... as J4B was saying in hist post #3, it's abit tricky. This tells me what's published for the "public" is iffy (if not misleading).

So how about this? Can we just estimate it. Eg. 10 years return is 10% as published, then prepare that the real return is 9%? Of course, if you own the funds, then your Personal ROR should be accurate.

It's a wise man who said "it's a bit tricky".

I checked two of my holdings, a mutual fund where I have the distributions reinvested, and an ETF where I take the distributions in cash. I compared my personal returns from Quicken, which calculates money weighted returns against the fund provider's reported total returns, over 1, 3 and 5 years.

My personal returns for the mutual fund were within 0.1 percentage points of the fund's reported returns. I attribute that either rounding error or slight difference in the calculation method. Quicken reports money weighted return, whereas the funds would report time weighted returns. Because the distributions are automatically reinvested, my personal return is the same as the fund's return.

My personal returns for the ETF ranged from 0.3 percentage points lower to 0.6 percentage points higher than the returns reported by the fund provider. I attribute the difference to cash drag and market fluctuations.

There is the fund's return vs. the investor's return. Without reinvesting the distributions, the investor's return for the holding will be lower than the fund's actual return if the fund's returns are positive. On the other hand, if the fund's return is negative, your personal return can be higher than the fund's return if the distributions are not reinvested.

But I don't leave the distributions in cash, I reinvest them in something. Right now I have <0.2% cash. So while my returns on any one holding may be lower because I don't reinvest the distributions, my return on my overall portfolio will be close to the aggregate of all my holdings.

My lesson from this is keep your money invested. If you don't DRIP, then reinvest cash distributions in something else, without incurring high transaction costs. Also some retired investors may use the cash from distributions to fund living expenses. This has been a bit of a navel gazing exercise, but there are worse hobbies than tracking and managing investments.

 

[GreatLaker]

Its just that you’re comparing apples and oranges. Money-weighted and time-weighted returns are supposed to be different, as are DRIP’d and non-DRIP’d results … if they were the same, I’d consider that a red flag and I’d be looking for a mistake somewhere.

A response upthread suggested that the investor's return could be estimated at 1 percentage point less than the investment return. I demonstrated that is not a good assumption and the actual situation is more complex and nuanced. Money weighted vs time weighted should not be an issue in my comparison. The mutual find had no external cashflows during the 3 years, and the ETF had one small withdrawal relative to the holding value.

Yeah, mutual funds are easy … reinvestment of distributions is the norm for conventional MF and is executed by the fund company itself … there are no third parties involved in MF DRIPs, so it is handled EXACTLY the same way every time, for every investor, regardless of which brokerage they might hold the fund through … there would still be the money-weighted v. time-weighted deviation, but if one doesn’t add or remove any money during a period, the investor’s personal ROR for that holding should exactly match the rates of return reported by the fund company.

Agree. The point I was trying to make is the more effectively distributions can be reinvested, the closer the investor's return will be to the investment return. That's easy with mutual fund DRIPs. It's harder with ETFs and stocks where there can be delays before investing the distributions resulting in cash drag, and the difficulty or inability to purchase fractional shares.

Actually, it’s the other way around … if the underlying investment is growing over time, then DRIPing suppresses the rate of return … you’re frequently adding new money, at higher and higher prices, so the rate of return gets diluted … kind of like “averaging up”.

I was referring to the total holding for the investment. If the investment return is higher than the investor can get on cash deposits, then reinvesting will result in the investor having more money at a future time (unless I have some major misunderstanding of how investing works). Investors cannot spend rate of return.

As far as I can tell, that Performance tab only applies to the entire account (or whatever group of accounts you select) in aggregate … not to individual holdings within an account.

Correct. The other post referred to gains, I was just pointing out the Returns tab, even though it does not allow reporting on individual holdings.