S&P 500 Index Found NOT tracking S&P 500!!!

[Morningstar]

Hey guys,

I am facing a rather large dilemma, my company provides a fairly bad 401k with 10% matching and through MassMutal which is loaded with high expense, low performing funds. Now the only half-way sensible option is the MM S&P 500 Index Adm ( MIEYX ) which has a rather large 0.47% expense ratio.

I was just about to enroll but when I actually compared the MIEYX to S&P performance, (And VFIAX and FUSVC) and it seems to be lagging sharply for the last 2 years! Now does Yahoo Finance charts take expense ratios into account or does MIEYX suck so badly that I can't even count on them to track the S&P 500 even thought they have the highest expense ratio!

Basically for the past 2 years, S&P is showing 10.30% gain while MIEYX only 5.61%!!! Knowing that I might not be able to count on them to track S&P 500, should I still invest in 401K to get the company match (18k for 1800$) and being ripped off year after year, or am I better off just not doing it and investing by myself into VFIAX!

Thanks,

[johnny847]

I'm not seeing what you're seeing.

Anytime you look up the performance of a fund, the expense ratio is already taken into account on the chart (whether that chart is provided by Yahoo, Google, M*, etc).

Now I can't get M* to give me the exact values off the graph, but there is no way that there is as large a difference as you are seeing.

[Yankuba]

Agree with Johnny - the fund is tracking the S&P less the expense ratio:

http://performance.morningstar.com/fund/performance-return.action?t=MIEYX&region=usa&culture=en_US

[Morningstar]

Here is what I am seeing, what am I getting wrong?

Thanks,

Ps. I am not how to attach correctly so please bear with me :)!

[Morningstar]

Also, when I do add Vfiax to it seems to accurately mirror the S&P 500.
(S&P 10.30%, VFIAX 9.74% and MIEYX 5.61%)

PDF Attachment enclosed,

Thanks,

[Yankuba]

Also, when I do add Vfiax to it seems to accurately mirror the S&P 500.
(S&P 10.30%, VFIAX 9.74% and MIEYX 5.61%)

PDF Attachment enclosed,

Thanks,

This is very interesting. At first I thought the issue was dividends - when you factor in the dividends for MIEYX it would be equal to the S&P500, but then I ran MIEYX against VFIAX and they were equivalent until three weeks ago - that's when they diverged. This is what we see in your attached PDF - MIEYX was equivalent to the S&P until this month. Something happened to MIEYX this month.

So I downloaded the prices for MIEYX and VFINX (see attached) and it looks like the issue is something happened between 12/14/2015 and 12/15/2015. Between those dates your fund dropped 2.46% while VFINX rose 1.06% - for a total difference of 3.52%.

I did some digging on Google to see what I could find but I didn't come up with anything.

So it looks like you're right - but I wonder what is going on...maybe some kind of distribution that isn't being accounted for.

[Yankuba]

It looks like there was a dividend during the dates under review:

http://www.dividendinvestor.com/news/20151215/dividend-stock-announcement-massmutual-select-funds-nasdaq-mieyx-today-declared-a-dividend-of-$0.3425-per-share.html

I think Vanguard does its dividends at the end of December, so I would suspect that VFIAX will drop by the value of the dividend at the end of the month while MIEYX will not. Then in early January 2016 the charts will converge again. Hopefully this is what is going on.

[Morningstar]

Yeah, but I believe the Yahoo Charts already account for dividend reinvestment, so the performance shouldn't be impacted by a distribution?

I am starting to think that the Yahoo Financial Chart I enclosed might not show the actual gain/loss percentage of the underling funds but some other comparisons where the large MM fee exacerbates the difference?

Thanks

[johnny847]

Yeah, but I believe the Yahoo Charts already account for dividend reinvestment, so the performance shouldn't be impacted by a distribution?

No, it doesn't.

Yahoo is showing you a price graph, whereas M* is showing you a growth of $10k graph. The latter takes into account reinvested dividends. The former does not.

You can easily prove this. I pulled up Yahoo Finance's chart of VFINX (investor shares of Vanguard's S&P index) for the maximum time period possible. It pulled up data starting from 1/1/1980, when it closed at $15.51. Today's price is $184.84. That is an increase of a factor of 10.92.



From Morningstar, their growth of $10k chart shows that $10k in VFINX from 01/01/1980 would be worth $463,389.42, or an increase of a factor of 46.34.




In short, you MUST make comparisons with dividends reinvested (ie, a growth of $10k graph) to make any meaningful conclusions about tracking error. And Yahoo Finance doesn't do that.

I think Vanguard does its dividends at the end of December, so I would suspect that VFIAX will drop by the value of the dividend at the end of the month while MIEYX will not. Then in early January 2016 the charts will converge again. Hopefully this is what is going on.

Vanguard distributed dividends for its S&P 500 fund (VFIAX) yesterday.

[Morningstar]

Ok, thanks for clarifying about Yahoo Financial not really showing total return (What a disappointment by the way) but  here is the problem I still have:

For the past 2 years both VFIAX and MIEYX have been tracking S&P. Taking into account that they distribute dividends at different times, (Which I would guess would equal itself out over time) why is the difference on the chart so large, a full 4.6%!

It can't see it being a dividend distribution timing or expense ratio for such a large difference between VFIAX/FUSEX and MIEYX. Since I would be sinking some money into it each year (18K) I really need to know what my attached chart is actually showing.

Even more unnerving, another chart from Stockcharts.com is showing a huge performance difference between VFIAX and MIEYX. (Attached)

Thanks,

[Morningstar]

Also, how on earth can I embed pictures like you do :)?

Thanks,

[johnny847]

Ok, thanks for clarifying about Yahoo Financial not really showing total return (What a disappointment by the way) but  here is the problem I still have:

For the past 2 years both VFIAX and MIEYX have been tracking S&P. Taking into account that they distribute dividends at different times, (Which I would guess would equal itself out over time) why is the difference on the chart so large, a full 4.6%!

It can't see it being a dividend distribution timing or expense ratio for such a large difference between VFIAX/FUSEX and MIEYX. Since I would be sinking some money into it each year (18K) I really need to know what my attached chart is actually showing.

Even more unnerving, another chart from Stockcharts.com is showing a huge performance difference between VFIAX and MIEYX. (Attached)

Thanks,

I don't understand why you say you understand Yahoo doesn't show total return...and then you provide another chart from Yahoo! Stop using Yahoo! Use Morningstar! Like your username tells you to!

Stockcharts.com is just wrong.



The dollar values in the upper left are the growth of $10k figures. You can see that the MIEYX fund has a growth of 23.26% from 7/23/13 until today (same time frame as your stockcharts.com screenshot. A far cry from the 13.90% that stockcharts.com shows.

There is a 1% difference between the performance of VFIAX and MIEYX over this time period. I don't know where you're getting this 4.6% from.

[johnny847]

Also, how on earth can I embed pictures like you do :)?

Thanks,

Whenever you have a question like that, just hit quote on the post you want to imitate and you'll see the code to generate it.

[johnny847]

Also, when I do add Vfiax to it seems to accurately mirror the S&P 500.
(S&P 10.30%, VFIAX 9.74% and MIEYX 5.61%)

PDF Attachment enclosed,

Thanks,

This is very interesting. At first I thought the issue was dividends - when you factor in the dividends for MIEYX it would be equal to the S&P500, but then I ran MIEYX against VFIAX and they were equivalent until three weeks ago - that's when they diverged. This is what we see in your attached PDF - MIEYX was equivalent to the S&P until this month. Something happened to MIEYX this month.

So I downloaded the prices for MIEYX and VFINX (see attached) and it looks like the issue is something happened between 12/14/2015 and 12/15/2015. Between those dates your fund dropped 2.46% while VFINX rose 1.06% - for a total difference of 3.52%.

I did some digging on Google to see what I could find but I didn't come up with anything.

So it looks like you're right - but I wonder what is going on...maybe some kind of distribution that isn't being accounted for.

You're looking at prices. NOT total return. A table of prices is irrelevant.

Let's look at a growth of 10k graph for VFINX, VFIAX, and the S&P from 12/13 to 12/18


These lines are all on top of each other.
If you look at the final values, VFIAX is actually slightly ahead of the S&P 500 benchmark (it is actually possible for an index fund to beat it's index) while MIEYX is 0.04% behind.

This is all reasonable considering MIEYX's ER is 0.47% whereas VFIAX's is 0.05%.

[acanthurus]

Threads like these are making me think investing for the masses might be a bad thing.

[Morningstar]

@ acanthurus
Posts like yours make me think forum posting for the masses might be a bad thing! If you have nothing meaningful to contribute then please don't!

@johnny847
Yeah, I will be using Morningstar's 10k growth chart to make my investment decision (I am enrolling; thanks for that) however I will also keep learning and analyzing all the other charts in depth in order to understand all the nuances of investing!

[Rollin]

I didn't read acanthurus' post as an attack on you, but pointed towards those that don't know what they are doing.  You appear quite knowledgeable and are having issues, imagine how the "general" public would do.

I may be wrong, but will give the benefit of the doubt.

[Morningstar]

If that is the case I profoundly apologize to acanthurus :)!

Thanks,

[Rollin]

I didn't read acanthurus' post as an attack on you, but pointed towards those that don't know what they are doing.  You appear quite knowledgeable and are having issues, imagine how the "general" public would do.

I may be wrong, but will give the benefit of the doubt.

Like me :)  That's why I go all in on index funds.

[jim555]

On stockcharts.com a ticker symbol preceded with an underscore _ will show a chart with actual prices.  Without the underscore will show prices adjusted for dividends.