6

I'm trying to understand the grow of an ETF (Vanguard VOO) over the past year.

I have checked both the Vanguard web page and Google, for the same ETF, and they show massive different growths.

In Google (search Vanguard VOO market price), the market price of VOO starts at 268 and finishes at 271.26. That's a growth of 1.1% approx.

The Vanguard's web page (https://investor.vanguard.com/etf/profile/performance/voo) reports a growth of 4.25%.

I'm definitely overlooking something, what is it?

  • 1
    Past performance is not terribly valuable to look at, anyway. Except comparing a fund with its index. In that, VOO should be breathtakingly close to the S&P 500 – Harper - Reinstate Monica Oct 1 at 22:40
15

The currently accepted answer is incorrect.

Vanguard is quoting the 1-year return as of 9/30/2019. This is calculated from the close of 9/28/2018 (the last trading day of September 2018) to the close of 9/30/2019.

It is important to get the exact dates right because stock indices can easily rise or fall 1% or more in a day. Stock price fluctuations are rough, not smooth, and a day's return can be a significant portion of a year's return. This is a counterintuitive property of Brownian motion.

VOO close on 9/28/2018 was $267.05. VOO close on 9/30/2019 was $272.60. As Bob Baerker notes, dividends over that span totaled $5.43. The exact total return depends on the prices at which the dividends were reinvested, but these numbers are consistent with a little over 4% return. Yahoo lists the adjusted close on 9/28/2018 as $261.52, and $272.60/$261.52 = 1.0424.

  • 1
    I mentioned that Vanguard's numbers were different because they probably used a slightly different start/end date. But you picked up on the other reason, namely that the dividend reinvestment on on various dates changes the ROI slightly. – Bob Baerker Oct 1 at 21:15
9

Google's numbers:

  • 10/01/18 $268.04
  • 09/27/19 $271.26

That's a gain of 1.20% which is far less than the actual return because Google did not account for dividends.

During that period you would have received $5.43 in dividends so the Total Return with dividends reinvested would have been 3.34%. You can verify these numbers with a DRIP calculator or with the adjusted close numbers at Yahoo Finance.

Vanguard's numbers are probably higher because their 1 year calculation used a start date a few days before or after these numbers.

  • 3
    This is why it's a bad idea to accept an answer so quickly. – RonJohn Oct 1 at 20:36
-1

You're comparing two different data points.

The Vanguard page you linked lists 4.25% as the 1-year return in a table under the following heading:

Average annual returns—updated monthly

This means that the average of the returns of 1-year periods during the life of the fund are 4.25%.

Google lists the price 1 year ago as 268, and today as 271, indicating that the return for this past year is closer to 1%.

Your Vanguard number is an aggregate of your Google number and other data (all prior years, at least some of which had higher returns).

  • 4
    The "other data" probably includes dividends. If you click the "1 Year" performance button, $10,000 a year ago should now be worth $10,424.75. – RonJohn Oct 1 at 12:48
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    No, 4.25% is the return for the past one year. The average annual return since inception is 13.44%. And no, the Vanguard number is NOT an aggregate of your Google number and other data (all prior years, at least some of which had higher returns). – Bob Baerker Oct 1 at 14:52
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    -1: Absolutely not. What "average annual returns" means is that for periods longer than 1 year, the returns are annualized (technically, it's the compound annual growth rate). Each number pertains to a single period of the specified duration ending on the specified date (9/30/2019). The closest thing to an "average of the returns of 1-year periods during the life of the fund" is the number under "Since inception", not the number under "1-year". – nanoman Oct 1 at 20:41
  • 2
    I almost never DV, but we need to highlight that this accepted answer is incorrect. Plus, I do believe a highly downvoted answer that is accepted will reward an achievement! – Harper - Reinstate Monica Oct 1 at 22:44

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