Author Topic: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?  (Read 1859 times)

andysandp

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Vanguard Vfinx (s and p 500 index fund) went up about 1500% since 1980 while the real S and P 500 went up 2400%.

Why is there such a big difference?

Paul der Krake

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #1 on: February 08, 2018, 10:34:53 AM »
1) That's now how percentages work.
2) Where are you finding these numbers, and are you reinvesting dividends?

andysandp

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #2 on: February 08, 2018, 10:40:26 AM »
No reinvestments of dividends.

I just used Yahoo chart.

Vfinx was about $14 a share in 1980 and now it's about $247.

S and P was 108 in 1980 and now its 2635.

Am I counting wrong?

nereo

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #3 on: February 08, 2018, 11:03:14 AM »
No reinvestments of dividends.

I just used Yahoo chart.

Vfinx was about $14 a share in 1980 and now it's about $247.

S and P was 108 in 1980 and now its 2635.

Am I counting wrong?
Yes.
"Do not confuse complexity with superiority"

andysandp

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #4 on: February 08, 2018, 11:13:12 AM »
Here the screen shots show Vfinx went up about 1500% and S and P went up about 2400%.

Or how should I count? 



kober.paul

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #5 on: February 08, 2018, 11:42:18 AM »
Here the screen shots show Vfinx went up about 1500% and S and P went up about 2400%.

Or how should I count?

The difference could be that you need to re-invest dividends from VFINX to do proper comparison. You can't use price charts for comparison - you need to look at performance charts with sites that take into account dividends.

With reinvesting dividends - I get the following from Morningstar performance charts

Start date: 1/16/1980
Start amount: $10000
End date: Now

VFIAX: $626,731 ((626731 - 10000)/10000 = 6167% = 11.50 CAGR)
SP500: $695,303 (6853% = 11.81 CAGR)

Remember, you can't invest in a index. It is theoretical. The 30 basis point difference above represents fund's expenses over time. Right now the funds expenses are listed as 14 basis points - that is VERY GOOD. I am assuming perhaps earlier VFIAX expenses were higher.


andysandp

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #6 on: February 08, 2018, 12:17:17 PM »
So is the Yahoo chart accurate if you don't reinvest dividends?  The chart doesn't show reinvestment of dividends for Vfinx, but it also doesn't show reinvestment of dividends for S and P either.

Kober.paul, what numbers do you get if you don't reinvest dividends for both Vfinx and S and P?

I understand Vfinx is not exactly like S and P 500 and there are fees, but 1500% and 2400% is a huge difference if you DON'T reinvest dividends.

Is the Yahoo chart wrong?

« Last Edit: February 08, 2018, 12:27:14 PM by andysandp »

hodedofome

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #7 on: February 08, 2018, 03:09:32 PM »
Well for one you aren't comparing the exact dates. It's only a month or so off but still.

I wouldn't necessarily trust the data on Yahoo. Look at the CAGR performance on the Vanguard site https://personal.vanguard.com/us/funds/snapshot?FundId=0040&FundIntExt=INT&funds_disable_redirect=true#tab=1

It's done 11.24% CAGR since 1976.

Large cap stock index (without any fees, basically the S&P 500 index) has done 11.37% since 1976. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=2&startYear=1976&endYear=2017&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&portfolio1=Custom&portfolio2=Custom&portfolio3=Custom&LargeCapBlend1=100


kober.paul

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #8 on: February 08, 2018, 05:05:08 PM »
So is the Yahoo chart accurate if you don't reinvest dividends?  The chart doesn't show reinvestment of dividends for Vfinx, but it also doesn't show reinvestment of dividends for S and P either.

Kober.paul, what numbers do you get if you don't reinvest dividends for both Vfinx and S and P?

I understand Vfinx is not exactly like S and P 500 and there are fees, but 1500% and 2400% is a huge difference if you DON'T reinvest dividends.

Is the Yahoo chart wrong?

The performance charts always include dividends. Don't look at price chart to calculate returns. Both 1500% and 2400% are way off, the real returns as I showed were more than 6000%.

andysandp

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #9 on: February 08, 2018, 05:29:43 PM »


"The performance charts always include dividends. Don't look at price chart to calculate returns. Both 1500% and 2400% are way off, the real returns as I showed were more than 6000%."
[/quote]


Kober.paul

Can you find out the returns for both Vfinx and S and P without dividends?  Just curious if they are still close.

Thanks!

Nate79

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #10 on: February 08, 2018, 07:38:43 PM »
Go to Morningstar. Input Vfinx. Go to chart. You will see a total return chart where it tracks very closely to S&P500 index.

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andysandp

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #11 on: February 08, 2018, 07:59:38 PM »
Your right!  If I use Morningstar, the returns of Vfinx and s and p are about the same from 1980!

I don't know why the Yahoo system is so off?  I'm surprised they haven't fixed the problem?!

Thanks everyone!

Arbitrage

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #12 on: February 08, 2018, 08:05:13 PM »
Yahoo's charts aren't 'off' or a 'problem' per se; they're just price charts, and they're accurate as price charts, plotting the share price over time.

Growth charts are different.

Acastus

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #13 on: February 09, 2018, 11:05:37 AM »
The fund pays out dividends in shares, and the share price always goes down so that your net investment stays the same after the dividend (+/- daily change in underlying index). If you only track the share price, it will be artificially low compared to the index since the index does not adjust. If you track the net return of the fund, it will be higher than the index because dividends get baked into the fund.

Simplistic example:

day before dividend, Share price = $100
Dividend of 1% dispersed
After dividend, Share price = $99

Grog

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Re: Why is Vanguard SP 500 almost 1000% worse then real S and P 500 from 1980?
« Reply #14 on: February 09, 2018, 12:26:38 PM »
Maybe there was a split?

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