Tag Archives: My Holdings

Be Wary of the Unrealized Gain or Loss Column for Re-invested Mutual Funds with BMO InvestorLine

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On the My Holdings page of a BMO InvestorLine account is a column reporting the unrealized gain or loss of each asset. Benevolently, assets that have zero gain or loss are reported in green. Alarmingly unrealized losses are reported in red. Which is probably why I noticed something was slightly odd with some mutual funds I held. I decided to look more closely at these funds and what I learned taught me to be wary of the unrealized gain value reported on the InvestorLine My Holdings page for mutual funds.

The fund I looked closely at was the BMO Mortgage and Short Term Income fund. This is one of the funds I bought pre-house, pre-kids when a book called The Wealthy Barber
was new and popular. Ask your great-grandparents about it, they probably read it too.

Anyway, the fund had been ticking along quietly re-investing itself for a zillion years earning significantly less than if I’d had the sense to invest it somewhere else. I think it’s been earning about 2.9% over the last 10 years.

What’s Reported on the My Holdings page at BMO InvestorLine

This page gives a reasonably useful snapshot of your holdings. It includes investment Names, Symbols, Quantity, Average Cost, Current Price, Market Value, Unrealized gain/loss, Unrealized gain/loss %, Portfolio %, Details, and Action. The Current Price is actually the 15-20 minute delayed price. Details includes things like a link to the Analysts’ opinions and a flag if a new opinion has been posted in the past 24 hours. Action is a drop-down list of things like Buy, Sell, Switch, Quotes+, and History.

It’s the Unrealized gain/loss though that caught my attention.

I’ll call the BMO Mortgage and Short Term Income Fund MSTIF for the fun of it. MSTIF pays a monthly dividend. I have this set to DRIP so the dividend is reinvested as new shares. That could increase or decrease my Average Cost depending on whether the fund is up or down.  And this change to the Average Cost appears to be part of the problem with the Unrealized Gain/Loss reporting.

When I brought this fund into my InvestorLine account, part of it had a value of $1000 which was calculated as 88.9458 units at $11.2428 each. Today, that holding is 92.2559 units at $11.2791 for a value of $1040.56.

My Holdings reports my Unrealized Gain as $3.13. Given my monthly distribution is close to this number, it didn’t seem likely.

When I do the real math, I can see my gain is 1040.56 – 1000 = 40.56. That’s a 4% gain not the 0.3% being reported on My Holdings.

So what gives? Why is the value so out of whack?

The system is calculating my starting value as the current number of shares times the adjusted cost.  But both the adjusted cost and the number of units are changing with each reinvested monthly dividend payment. They don’t reflect my starting investment.

What I’m expecting to see on the report is a gain calculated as (how much the fund is worth now) minus (how much the fund was worth when I bought it (or in this case transferred it in)).

Instead, what’s being reported is the gain calculated as (how much the fund is worth now) minus (how much the fund was worth after the last dividend payment).

The reported number is marginally useful, but it isn’t what it seems to be. You have to be wary when looking at the report and remember it’s only reporting part of the gain or loss, not the total gain or loss.

Why Is the InvestorLine Mutual Fund Net Gain/Loss Different than Expectation?

It looks to me like InvestorLine ran into a screen space constraint.

They could report the original number of units, OR
report the correct current number of units.

They appear to have chosen to show the correct number of  units which allows the default programming to show the correct current value for the account.

The InvestorLine Net Gain/Loss Reporting is Correct so long as You are Aware of What is Being Reported

I suppose it would be nice if they had room for more columns to show the initial purchased cost, so they could calculate the total net gain/loss.

At this time, however, they seem to be doing the best they can with limited screen space.

And so long as you are aware of what they are reporting, it works fine.

Further Conclusion
For those of you who are thinking: Why on earth are you holding MSTIF?! Don’t worry. I’ve been consolidating various RRSP accounts that were scattered across most of the Canadian financial industry. In slow, ponderous, measured steps, I’m correcting our investments. In the meantime, at least MYTIF is in no danger of losing money. I have lots of other investments that are busily doing that!

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Join In
Have you noticed any odd calculations in your net gains/losses at InvestorLine or another brokerage? Do you have any words of caution to share with the rest of us? Please share your experiences with a comment.