I am trying to understand the average annual returns on this index fund: VFTSX according to its data on Vanguard's Price & Performance page.
I am looking at my account history for this fund, and I am trying to figure out how the math was done to come up with a 1 year return of 10.24% mentioned above.
- 3/16/16: $109.40
- 6/16/16: $101.88
- 9/16/16: $101.05
- 12/23/16: $120.87
I looked at my account balances by date for VFTSX and saw:
- 3/15/16: $25,540.33
- 6/15/16: $26,248.94
- 9/15/16: $21,175.42
- 12/15/16: $23,140.86
Averaging those four balances out comes up with ($25,540.33 + $26,248.94 + $21,175.42 + $23,140.86) / 4 = $24,026.39
The sum of the dividends is $433.20
As a percentage of my "average" balance for the year, the dividends come to $433.20 / $24,026.39 = .018
So that's 1.8%, which I am trying to compare to the 10.24% from Vanguard's reported "average annual returns". This fund has an expense ratio of 0.22%, but that is nothing compared to how far off these two percentages are. I sense I am missing something very fundamental in how "average annual returns" is calculated. What am I doing wrong?