Index trackers and dividends

thrupence

How do you find out when researching, whether Index trackers reinvest dividends or even if they include dividends at all?

I realise with managed funds you can go with the INC or ACC option, but what's the position with Index trackers?

Obviously dividends are a very important contributor to growth, so any clarification would be most welcome.

Aegis

As far as I can tell, it's the exact same thing. See these two FTSE100 trackers:

Income: http://www.h-l.co.uk/funds/security_details/sedol/0040761
Accumulation: http://www.h-l.co.uk/funds/security_details/sedol/0041247

sabretoothtigger

Average annual growth of ftse100 is only about 3% long term so dividends are important like you say.
Trackers will collect dividends and either reinvest or pay out to yourself. Personally I favour the income option as it gives you some feedback on the markets performance and the option to reinvest or not

EdInvestor

You can check what the yield on individual trackers is here:

http://www.trustnet.com/ut/funds/perf.aspx?txtSearch=&universe=ut&nsUniverse=UT&sort=5&ss=0&columns=&view=price&page=0&booIMA=0&reg1=all&sec=ind&ima=all&unit=all&type=all

It can vary quite widely, some tracker providers confiscate the whole dividend for themselves :mad:

thrupence

Aegis wrote: »

As far as I can tell, it's the exact same thing. See these two FTSE100 trackers:

Income: http://www.h-l.co.uk/funds/security_details/sedol/0040761
Accumulation: http://www.h-l.co.uk/funds/security_details/sedol/0041247

Thanks. I should have looked at HL first, since that's where I have my tracker. Not the FTSE one, but anyway it's treated the same way.

It's just I was reading somewhere that trackers mostly don't include dividends, and was rather concerned that my plan for global diversification was coming unstuck :eek:

thrupence

EdInvestor wrote: »

You can check what the yield on individual trackers is here:

http://www.trustnet.com/ut/funds/perf.aspx?txtSearch=&universe=ut&nsUniverse=UT&sort=5&ss=0&columns=&view=price&page=0&booIMA=0&reg1=all&sec=ind&ima=all&unit=all&type=all It can vary quite widely, some tracker providers confiscate the whole dividend for themselves :mad:

Yes. That's what I was reading about.

So how can you guage when you're getting the divi and when you're not, other than when it's laid out easily as with HL?

Jnelhams

You might want to look at an Exchange Traded Fund (ETF) these are cheaper than an OIEC/Investment trust.

thrupence

Jnelhams wrote: »

You might want to look at an Exchange Traded Fund (ETF) these are cheaper than an OIEC/Investment trust.

The only thing that puts me off ETfs is that they're expensive to trade in HL and I'd prefer to keep everything in the one place just now cos things are getting a bit complicated.

Once I get my long term funds sorted out I might look at shares next year and include some ETFs in another account.

Jnelhams

Try a monthly plan with iii for £1.50 per transaction

Count_Dante

EdInvestor wrote: »

You can check what the yield on individual trackers is here:

http://www.trustnet.com/ut/funds/perf.aspx?txtSearch=&universe=ut&nsUniverse=UT&sort=5&ss=0&columns=&view=price&page=0&booIMA=0&reg1=all&sec=ind&ima=all&unit=all&type=all It can vary quite widely, some tracker providers confiscate the whole dividend for themselves :mad:

Surely this cannot be true? Would they not have to state that in their annual charges?

sabretoothtigger

Its not the case afaik. Management charges are pretty low for trackers, that is pretty much the point of having one.

So half a percent in charges, yield of ftse100 is about 5% now so call it 4% return after losses and an average of 3% very long term and thats 7% return overall, sometimes alot worse and sometimes alot better

Guaranteed bonds that track the ftse wont give dividends, but thats not really a tracker