Massively confused about my retirement fund

[snousle]

I spent a little time looking at my retirement account, wondering if I should do something else with it. Some articles on the monstrous effect of management fees got me more interested - turns out I'm paying about 1.3% fees, which is very high, and over the course of a lifetime this can easily eat 25% of the whole account. So I'm probably going to move it all to Vanguard.

In the meanwhile, I looked at some charts of the performance of the account. What I found was kind of disturbing, and I don't understand it at all.

Here is Diversified's chart for "growth of $100" in the short-horizon fund, taken from a PDF on their web site:



Looks rather appealing, right? The fund also has a ticker symbol, so I looked it up. This is Yahoo's account of the value of the fund over the same time period:



Um. Obviously very different interpretations of performance of the same fund. I thought that maybe the Yahoo chart was in constant dollars, but that doesn't appear to be the case. (??? I can't find a clear answer on that one way or another; in any case there hasn't been enough inflation since '96 to account for the discrepancy.) Maybe the Yahoo chart doesn't include dividends or something?

I would presume that they couldn't actually be lying about the performance of the fund or they'd get their asses sued off. So how can this be? I thought I had a good general understanding of how retirement funds work, but this has me TOTALLY baffled and has left me feeling quite disturbed. Coupled with the discovery of these rather high fees (a recent law makes disclosure mandatory), my impression of Diversified as a good fund manager has been thrown into doubt.

Comments

[theoctothorpe.livejournal.com]

Those charts are on entirely different scales, and plotting different things. You'd have to normalise to get what you're after.

[snousle.livejournal.com]

They are obviously plotting different things, the question is, what is the stock ticker plotting, and why is it different?

[goldibehr.livejournal.com]

My guess: the $100 chart assumes dividends/distributions are reinvested, but does not include any fees.

The yahoo chart is (usually) Net Asset Value, meaning the current value of one unit on a specific day. It is definitely not in constant dollars.

[snousle.livejournal.com]

It must be something along those lines but the lack of a specific explanation bothers me. Particularly since I've read several bits of advice to the effect that a good way to compare funds is by looking them up on Yahoo using their ticker symbol. This approach is at least obviously useless in this case but in other cases it might be very misleading. I have a question in to Diversified's help desk, we shall see what they say.

[fogbear.livejournal.com]

I'm with goldibehr on this one. The Yahoo! chart is simply the price (or NAV) each day adjusted for splits. The chart with the fund reflects the growth of $100 over time assuming reinvestment of dividends and (probably) allowing for fees. Somewhere, the accompanying text should tell you what the assumptions are.

[urso.livejournal.com]

You might just be the only person I know of my generation with a retirement fund.

[snousle.livejournal.com]

Well, we know at least some people that worked for corporations that almost certainly offered automatic deductions and matching contributions. They might not talk about it but if they didn't take advantage of that then they must have been out of their minds.

My attitude is, no matter where you find yourself in life, there is always someone living on 10% less than you are, and getting by one way or another. So there is no reason to not imitate them and put the 10% into savings.

As I like to say, "compound interest is the most powerful force in the universe", so you don't want to be on the wrong side of it. I realize that planning for the future is unfashionable these days but that's how I roll.

Re:

[meckimxomac.livejournal.com]

http://www.youtube.com/watch?v=c6M_6qOz-yw