RE:RE:RE:RE:RE:RE:FFN unit NAV to oct22 = approx:$17.40I understand eactly how the fund works, thanks. I've owned it for over 10 yrs now, although I seldom chase immediate gains. Im more concerned with longer term income, which I then typically reinvest across a number of Splits and Income funds, with allocation chosen based largely on current return levels, plus some other balancing I do.
For any investment, your return (and therefore what should logically be the 'decision' value is the rate you will pay on THAT investment vs the return you estimate you will receive ON THAT investment (which may or may not include a guess at capital growth along with distributions) . For a given BUY, I don't care that much where the price goes once I own it.. If it drops, I have a better chance to invest more, if it rises I might better place your money elsewhere. We do care, of course about the distribution rate, which plays into return, as well as the NAV, which determines whether a distribution is paid at all.
Actual cost to buy and sell is of course more important to the day trader guys who are trying to buy low/sell high. They care less about the rate of return except as it might impact price.
The part that I and others don't understand about your description is that you seem to treat your entire holdings in the fund as a single block (which is fine by itself), but you seem to think that somehow buying more at a higher price reduces that return. It doesn't. It offers a lower % return on a NEW purchase, but doesn't change the $$ return on the previous holdings. Why do you care what the overall % return is for a block of shares once you own them? $$ return has some value in determining whether selling out in favor of another fund or share, but it doesn't make sense to me to worry about the % rate of return on the overall group. Once invested, it's an asset, I only care if there is a better way to apply those assets.
Even with the 9 months of no distributions in 2020 and the odd month in previous years, my dollar cost average price after distributions is negative. That doesn't stop me from buying more when my various criteria are met. Will that RAISE my cost per share overall? Yes
Incidentally, I think you'll find that the majority of guys on here understand quite well how the fund works. I see the odd new name who asks basic questions, which is fine, but there aren't many who fundamentally misunderstand what they are buying.
I wonder if this is a translation issue, but your comment that the price you pay should only be based on NAV is also wrong when it comes to a Split. The issue is that the units are paid distributions far in excess of the NAV would suggest, and THAT is what we are paying for. We are betting that long term distributions and growth together will exceed any potential loss of NAV if/when the fund is rolled up. Even with the 9 months of no distributions in 2020 and the odd month in previous years, my dollar cost average price after distributions is negative. That doesn't stop me from buying more when my various criteria are met. Will that RAISE my average cost per share? Yes, because my average is already very low, any purchase will increase it. But does that purchase increase my income going forward? Yes, it does.