A friend owns a mutual fund, Capital World Bond Fund CL A. He has owned it for a fairly long time, but does not know how long. It might have originally been with a different brokerage about a decade ago. He does not remember.

He wants to sell the fund (for a loss), and the current brokerage reports the Cost Basis as more than the Amount Invested.

How is this possible?

(BTW, his financial adviser has given him the Amount Invested value and not the Cost Basis in order to compute the net loss, but I'm fairly sure the financial adviser is wrong. See this SE question.)

  • How much of a difference is it? Could it be that the brokerage is not including reinvested dividends in Amount Invested? – dg99 Dec 16 '15 at 0:16
  • @dg99 The difference between Cost Basis and Amount Invested is about 10%. The difference between CurrentValue-CostBasis and CurrentValue-AmountInvested is over 300%. – RockPaperLz- Mask it or Casket Dec 16 '15 at 0:22
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    I may be mistaken, but transaction fees could be considered part of your cost basis, but they aren't invested. – JohnFx Dec 16 '15 at 3:50
  • @JohnFx They include fees for both the Cost Basis and the Amount Invested. – RockPaperLz- Mask it or Casket Dec 16 '15 at 5:42

Reinvested dividends go into cost basis but don't involve any additional investment.

  • Thanks. The term was confusing to me because dividends can be invested in anything, and when they are reinvested, it is still an investment. It looks like the term Amount Invested does not match this logic. – RockPaperLz- Mask it or Casket Dec 16 '15 at 0:15

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