Author Topic: Do "Hypothetical growth of $" charts include dividend reinvestment?  (Read 3361 times)

cheapass

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For example, this fund would have turned $10K into $17K during the last 10 years. Does this assume dividend reinvestment or no?

https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0122

MustacheAndaHalf

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Re: Do "Hypothetical growth of $" charts include dividend reinvestment?
« Reply #1 on: February 10, 2016, 08:38:30 PM »
Take a look at the "performance" tab, where it shows returns based on taxes.  The first two rows of percentages are called: "Returns before taxes", "Returns after taxes on distributions".  Since taxes refers to distributions, the first row includes distributions.  That row shows 5.38%/year total return.  Taking (1.0538) to the 10th power gives 1.689x, so $10,000 grows into $16,890.  Sounds like the $17k figure does include reinvested distributions - but ignores the tax implications.

Most funds ignore tax implications - Vanguard started this trend to show the tax impact of funds, and to me it's useful additional information.



TheAnonOne

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Re: Do "Hypothetical growth of $" charts include dividend reinvestment?
« Reply #2 on: February 11, 2016, 11:42:08 AM »
For example, this fund would have turned $10K into $17K during the last 10 years. Does this assume dividend reinvestment or no?

https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0122

Almost all charts on the internet do NOT include dividends. Though, I think the vanguard one assumes re-investment...

An interesting thought experiment though. The 2% that VTSAX returns in dividends, is usually above and beyond what is in the charts. This is pretty cool!

JZinCO

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Re: Do "Hypothetical growth of $" charts include dividend reinvestment?
« Reply #3 on: February 11, 2016, 11:53:53 AM »
For example, this fund would have turned $10K into $17K during the last 10 years. Does this assume dividend reinvestment or no?

https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0122

According to the information included in that webpage, it does.
As a general principle price charts do not include reinvestment and growth charts include reinvestment.

In fact Vanugard let's you look at both. Go to price and performance and scroll to the 10,000 growth chart. In the upper-right, a button will let you switch between price and growth. For this fund we see that over ten years, price has rose 20.3%, but that the price+ divided reinvestment has yield a growth of 56.5%.
« Last Edit: February 11, 2016, 12:05:11 PM by JZinCO »

mizzourah2006

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Re: Do "Hypothetical growth of $" charts include dividend reinvestment?
« Reply #4 on: February 11, 2016, 12:48:53 PM »
For example, this fund would have turned $10K into $17K during the last 10 years. Does this assume dividend reinvestment or no?

https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0122

Almost all charts on the internet do NOT include dividends. Though, I think the vanguard one assumes re-investment...

An interesting thought experiment though. The 2% that VTSAX returns in dividends, is usually above and beyond what is in the charts. This is pretty cool!

This is what I have noticed too. If you want to look at actual returns you can use yahoo finance adjusted close prices.

https://finance.yahoo.com/q/hp?s=VASGX+Historical+Prices


So the VASGX adjusted close on Jan. 4th, 2006 was $16.48. The adjusted close on Jan. 4th, 2016 was 26.90, which is a return of 63.23%.



MDM

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Re: Do "Hypothetical growth of $" charts include dividend reinvestment?
« Reply #5 on: February 11, 2016, 07:19:50 PM »
See also https://www.bogleheads.org/forum/viewtopic.php?t=81248 and https://www.bogleheads.org/forum/viewtopic.php?t=118683.  In short, use Morningstar - see the links for more details.

A reason for charts not to include the effect of taxes is that the tax rate can vary significantly by individual.