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Vanguard Health Care Inv Message Board

  • kwb2139 kwb2139 Dec 18, 2013 1:04 PM Flag

    December 17, 2013 Decline

    Can someone tell me what happened to VGHCX on 12/17/13? I checked the fund's holdings, but there didn't appear to be any activity to support a 6.67% (or $12.85) decline per share. Anyone have any thoughts?

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    • This fund normally has div/cap gains distributed in Dec and March......so this year, Dec 16th was the Record Date to be a recipiant of this distribution (6.67%)..... By protocol, the fund has to lower its NAV by the 6.67% distribution the next day (Dec 17th), in order to prevent "double dipping."

      This is the dip you noticed on the pay date (Dec 17th/18th). If you automatically reinvest the Div/Cap Gains, then it will be credited at the new lower NAV price.

      Historically, the fund usually bounces back to its pre-distribution NAV price anywhere from a month to 2 months afterwards (providing the Market is stable). So that's the best case scenario and one pockets the 6.67% distribution plus lower distribution NAV shares.......pls keep in mind that this distribution is taxable if in a non-IRA account but if you are retired, then the tax rate is just a small percentage over your adjusted gross income(AGI).....but if one is in an IRA account, none of the distribution is immediately taxable (tax deferred) and no tax burdenl if one is in a Roth IRA account (tax avoidence).

      So put this fund in an Roth Account and await for the March distribution....so we cycle in the March and December distributions, providing the fund will distribute (not guaranteed).......but in the Vanguard website, they tell you in early Nov and Feb which funds will have a distribution.....if this fund qualifies, then dump some extra money in before the Record Date (like the day before, if you want). They actually give you an estimate of what the distribution will be.....for 2013, it was one of the highest ever. Pls remember that the March distribution will probably be lower than but it's still significant.

      It's a cool little ploy that has been working for the past few years......once again, it's all predicated on what the Market is doing at the time and what you think the Market Condition will be in 1-2 months downstream.......it's not risk-free but a low risk, with the odds in your favor.

      Sentiment: Buy

    • Go and check the number of shares you own...probably up by 6.67%
      Cap gains distribution...

    • Probably year end distributions from dividends and capital gains.

 
VGHCX
200.65-1.90(-0.94%)May 3 6:45 PMEDT