Why The (I) Fund Gains/Loses When Least Expected

[malyla]

Tom,

The stock market showed that the EFA closed at 74.18 Feb 28 where the EFA closed at 73.63 on Feb 27. Therefore, I expected a higher share price on the I fund for Feb 28, but the share price was down (22.55) for Feb 28 where it was 22.67 on Feb 27.

Feb 27: EFA = 73.63 - I fund share price = 22.67
Feb 28: EFA = 74.18 - I fund share price = 22.55

Why the inverse response in the share price?

Malyla
-very new at this-

[Wheels]

Malyla - You need to do a lot of reading but the info is scattered all over and may be difficult to sort through so I will offer a Reader's Digest version of an answer.

The EFA is not a good way to monitor the I fund on a day to day basis. The I fund is based on the EAFE which is an index (much like the S&P 500 is an index). The EFA is an exchange traded fund which is also based on the EAFE but it doesn't trade the same (many reasons, some of the simpler ones are because of the effects of the dollar on the index and because the index trades at all hours while EFA trades from 9:30 to 4:00 with our markets). Over the long term, the EAFE, the EFA, and our I fund will return almost identical amounts, but again from day to day they will vary, sometimes by a great deal as you noticed yesterday.

That's enough for now. Any more questions feel free to ask.

[tsptalk]

Thanks Dave. And here is a link to the fair value question...

http://www.tsptalk.com/mb/showthread.php?t=3111