Question

A year ago, the Vanguard Consumer Staples Index Fund (VCSAX) was being quoted at a NAV of $51.02 and an offer price of $55.76. Today, it’s being quoted at a NAV of $62.36 and an offer of $65.54. What is the percent holding period return on this front-load fund, given that it was purchased a year ago and that its dividends and capital gains distributions over the year have totaled $0.03 per share?

Answer 1

The Vanguard Consumer Staples Index Fund is a front-load fund. so, to purchase shares in the this front-load fund, you have to pat some fee up-front like sales commissions etc. so cost of purchasing share in this fund will be higher than its NAV. that higher price is offer price of $55.76.

but return by selling or holding the shares you will get, will be on NAV only.

percent holding period return = [(NAV after one year + dividends and capital gains distributions)/cost of share purchased] - 1

percent holding period return = [($62.36 + $0.03)/$55.76] - 1 = ($62.39‬/$55.76) - 1 = 1.1189 - 1 = 0.1189 or 11.89%