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The Closing Bell: Dow's 300-point Drop Friday Caps Worst Week Since 2011 S&P 500 Since 2012
Hank, funny you should say that about PRWCX. I decided to sell my stake in FAAFX on Thursday to shift that money into PRWCX today, which I did. Does that mean I got a 10% bargain on that purchase of PRWCX? I'm always confused on distributions affecting price.
No Mike. They'll sort it out. That's probably why they include a separate (earlier) "record date" before the distribution date. Shouldn't have any effect. But a nice thought. You'll get today's price - but not the X-Dividend payment the other shareholders received. Should work out the same.
(I'm assuming the $$ is in some type of tax-sheltered plan like an IRA or 401k. It not, than there are some tax ramifications)
Mike, can you confirm which price you got? Don't they declare distributions at the closing price?
Edit: That didn't come out the way I wanted. Of course they declare on the closing price. I think you are okay as long as you bought the fund at the distribution price. Otherwise you will pay taxes on gains you never had.
If this is in tax deferred then no issue unless you bought pre-distribution. Then you have a bit of a hole to come out of.
It is confusing still. The 401k (T Rowe Price) shows a transaction buy cost of $25.60. Yahoo shows yesterdays closing fund value as $25.60. Morningstar's un-reliable data still shows previous day price of $28.53.
I'm guessing as you said Hank, that it gets sorted out.
If concerned Mike, remember TRP has Saturday hours, so you could call. I'm actually updating my records this morning and TRP's quote of $25.60 on PRWCX appears correct.
The X-Dividend is always confusing. Has to do with Fed tax compliance regulations imposed on mutual funds. So they're required to do it. Most often, they drop the NAV by a certain amount and than pay that back to shareholders "of record" on the following day (usually in the form of additional shares of the fund). If you're reinvesting dividends & cap gains and if you're in a tax-sheltered account, they have little bearing on when you buy or sell. I recall once I had the opposite situation - sold a fund the day the dividend was declared and there was a big drop or gain in the markets that day. They sorted it out just fine and there were no unusual consequences.
In case someone gets the wrong idea on distributions, they are great for long term holding of funds. While the NAV drops you are getting additional shares as well. it is like building a foundation of sorts. In later years the power of those additional shares will have a significant role in the growth of your investment. The only downside is the taxes you have to pay but you still have the majority of the benefit.
Comments
Might be too much for some.
Oil sure looks like it wants to go to $50 fast --- or maybe $40 or $30?
(I'm assuming the $$ is in some type of tax-sheltered plan like an IRA or 401k. It not, than there are some tax ramifications)
Edit: That didn't come out the way I wanted. Of course they declare on the closing price. I think you are okay as long as you bought the fund at the distribution price. Otherwise you will pay taxes on gains you never had.
If this is in tax deferred then no issue unless you bought pre-distribution. Then you have a bit of a hole to come out of.
It is confusing still. The 401k (T Rowe Price) shows a transaction buy cost of $25.60. Yahoo shows yesterdays closing fund value as $25.60. Morningstar's un-reliable data still shows previous day price of $28.53.
I'm guessing as you said Hank, that it gets sorted out.
I like Marketwatch's tracker which also shows $25.60 for PRWCX.
http://www.marketwatch.com/investing/Fund/PRWCX?countrycode=US
The X-Dividend is always confusing. Has to do with Fed tax compliance regulations imposed on mutual funds. So they're required to do it. Most often, they drop the NAV by a certain amount and than pay that back to shareholders "of record" on the following day (usually in the form of additional shares of the fund). If you're reinvesting dividends & cap gains and if you're in a tax-sheltered account, they have little bearing on when you buy or sell. I recall once I had the opposite situation - sold a fund the day the dividend was declared and there was a big drop or gain in the markets that day. They sorted it out just fine and there were no unusual consequences.