Using Adjusted Close to Estimate Mutual Fund Total Returns

Summary

The document considers whether Yahoo Finance adjusted closing prices can be used to calculate mutual fund total returns. It distinguishes returns based on unadjusted closing prices, which track changes in quoted prices, from total returns that account for distributions and assume those distributions are reinvested. Historically, Yahoo’s adjusted close reportedly incorporated dividends and capital distributions, making it a possible basis for estimating total returns.

The answer cautions that Yahoo had recently changed its adjustment method, apparently including dividends but omitting capital distributions. Under that reported behavior, adjusted close may no longer represent mutual fund total return accurately, while exchange-traded funds with dividend distributions alone may still be handled correctly. This is a time-sensitive account of a data vendor’s methodology, not a general guarantee about adjusted prices or current Yahoo data. Analysts should check the source’s adjustment rules and distribution history before treating adjusted close returns as total returns.

Key ideas

• Total returns account for distributions and commonly assume reinvestment.
• Adjusted close may be useful only when its calculation includes the relevant fund distributions.
• The answer reports a change in Yahoo’s treatment of capital distributions.
• Verify the data provider’s current adjustment methodology before using adjusted prices for fund performance.

Tags

# Yahoo Finance Adjusted Close for Mutual Funds


# Yahoo Finance Adjusted Close for Mutual Funds












I am doing an analysis about Mutual Fund Performance.

I know if I use the Close Prices I can calculate the NAV Returns of a Mutual Funds

But I want to calculate the Total Returns. Can I do it if I use the adjusted close prices of yahoo finance?

## Answer by WaltS (score 1)

https://quant.stackexchange.com/a/60952

Yahoo Finance used to include dividends and capital distributions in their calculation of Adjusted Close so you could use Adj Close to calculate total return assuming all distributions are reinvested. However, it appears that in the past week or two, Yahoo has changed the calcuation and only includes dividend distributions in Adjusted Close which makes them more or less useless. ETFs, which only have dividend distributions, are still computed properly.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.