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Why did the fund fall more than the index?
The multiple is for the day, not a promise about a month. On a day it works as built, a down index means a fund that is down by more. That larger drop is the product, not a broken quote.
The short answer
The multiple is for the day, not a promise about a month. On a day it works as built, a down index means a fund that is down by more. That larger drop is the product, not a broken quote.
The position
Here is one position (hypothetical, made-up prices). The count is 100 shares. The first figure in the story is $50. The later figure is $45.
| What you are looking at | Count | Price | Value | Versus the first total |
|---|---|---|---|---|
| The first total | 100 shares | $50 | $5,000 | $0 |
| After the price fell | 100 shares | $45 | $4,500 | −$500 |
The bottom row is this account. The −$500 is the gap. The price fell. Holding does not put the first figure back. These figures are made-up, so the subtraction stays checkable after the market moves.
Start with the count. 100 shares at $50 comes to $5,000. The later price is $45. The same count at that price comes to $4,500. Subtract. $5,000 minus $4,500 is $500. That is the whole table. It is not a fee hiding in the price, and it is not a forecast of tomorrow.
How to check it on the statement
Read the count first. Then read the price the statement used. Multiply those two yourself. If your product is not a share, multiply the point move by the contract size instead of multiplying a share price. The number you get should match the value in the table, or you are looking at a different count.
Write the first total on one line and the later total under it. The gap is a subtraction. Do not add a second story, such as a fee or a dividend, until you see that line on the statement. A missing line is a zero, not a guess.
If you sold part of the position, split the page into the cash that left and the count that stayed. Add those two. A sale of one piece does not freeze the price of the piece you kept.
If the order never filled, the statement still shows the old count. Look in the order history for a cancel, an expiry, or a limit the market never traded. The position page will not show an order that died.
Do this before you decide what the market "meant." The dollars are the count times the price you can point at. The reason can wait until those two numbers are written down.
What happened
The index fell from 100 to 95 on this hypothetical day. A fund built to move twice as far fell from $50 to $45. You hold 100 shares. They cost $5,000 and are worth $4,500. The index move was five points on a 100 start. The fund move was five dollars on a fifty-dollar share, which is the bigger percentage, and it is the one in your account. This page prices that one day. It does not price a month of daily resets stacked together.
How to read a brokerage statement shows the count you still have and the price the statement used. It does not replay the order you meant to send. If the statement's count disagrees with this page, use the statement and do the subtraction again.
What this is not
People compare the fund's dollar drop to the index's point drop and call them equal because both moved by five. The starting numbers were different. The leveraged-fund calculator is where a longer stretch gets priced. This page is one day, and the price fell.
The account does not undo it
A TFSA or an RRSP changes the tax treatment of what is inside. It does not put the first price back. The shelter does not pay the gap back, and a lower price does not hand contribution room back. Room follows the contribution rules, not the chart. A taxable account shows the same mark. The wrapper decides tax. The count and the price decide the dollars.
If the custodian does not allow this product, the custodian's list wins over a general description. The math above is only for a position the account actually holds.
What to write down
- Which fund, and that it is a daily multiple.
- The index move, as context.
- The fund share price you actually hold.
- That a longer hold is a different calculation.
Then subtract. If a step is missing, the gap on the screen is not explained yet. Do not fill the blank with a rate, a fee, or a yield you did not read off a statement or a contract spec.
Questions
Should the fund have fallen five points, like the index? No. The multiple applies to the percentage move for the day, not to matching the index's point count.
Is the extra drop a fee? No. It is the fund doing the larger move it is built to do, on this down day.
What about next week? This page does not price next week. Daily multiples stacked over many days are a different problem.
Does a TFSA dampen the multiple? No. The shelter does not turn a two-times fund into a one-times fund.
Are these the live prices? No. They are hypothetical, so the −$500 stays checkable.
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