Last week, two funds that I own suffered 10% drops in one day, on consecutive days (one down 10 pts on one day, the other down 10 the next day).
These are both high perfoming funds - they were both up nearly 20% in the last 12 months. Both days on which the drop occurred were up days for the markets, too. I looked at the top holdings for the funds and I didn’t see any corresponding drop - so what gives? Is this my contribution to the fund managers Christmas bonus?
The funds in question are Neuberger Berman International (NBITX) and Oakmark Select I (OAKLX).
Most likely a distribution of dividends. You got paid for dividends from the fund itself, you likely didn’t lose anything. It only appears that way because the value of the fund is less, but you made up for it in dividend payouts.
I could be wrong though, wait for other fund savvy folks to post. First year for fund investing myself.
This is termed “Ex-dividend day” and most funds have it in December. The dividends were subtracted from your individual share value. Additional shares were purchased with the dividend amount, so you had no net change in amount of your investments.
In due time, you will get a statement telling how many shares you now own.
Just to clarify, it may not be a divident payout, but could also be a capital gain distribution as well. You should be able to spot it in your fund transaction section of you portfolio.
Here’s a recent thread on the same issue on Fatwallet.com from 12/16:
My net dollar value fell by a commensurate value as well, so I don’t think this is the answer, unless the new shares have yet to be deposited in my account.
It could take a week, if a distribution did take place. I say that only because I’m not familiar with these particular funds and maybe they did drop. But December is a common time for distributions, and if it happened last week, it may take a week to show up. To be on the safe side, you can contact your fund holder and ask them what’s up (Vanguard, Fidelity, etc…)
As ParentalAdvisory noted above, it can take a week or longer before the 'puters crunch the numbers and the additional shares that are to be purchased with the dividend/cap. gain distributions are added to your account.
Relax: One day soon you will be amazed and delighted with the increased number of shares you now own.
Oh, here’s an unsolicited tip: NEVER sell fund shares between the time that the distribution amount is subtracted (Ex-dividend day) and the day the new shares are added to your account. If you do, you will lose the distribution amount. That money will them go to enrich the shareholders that didn’t sell during this window of time.
Another comment: If your shares are not in an IRA, 401k, or similar tax sheltered investment, the above mentioned distributions will be taxable income. Even though you didn’t actually receive the money in your pocket, so to speak, in February you will get a form 1099 or similar, and you will have to report and pay taxes on the amounts distributed.
Federal regulations require that funds distribute virtually all of these gains at least once a year. That way the government gets extra money to buy $5,000 toilets, build bridges to nowhere, and support other vital govt. operations.
