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ETFs, trackers & dividends
Comments
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Plenty of etfs provide dividends quarterly, semi-annually, annually etc. For example, dividend calendars for ishare and hsbc etfs in links below give frequency of payments, ex-dividend and payment dates. But need to DIY research on individual etfs on the relevant provider sites for historical payments and to estimate current yields.
http://uk.ishares.com/en/pc/stream/pdf/false/publish/repository/documents/en/downloads/dividend_calendar.pdf
http://www.etf.hsbc.com/etf/attachments/uk/dividend_calendar.pdf
JamesU0 -
Plenty of etfs provide dividends quarterly, semi-annually, annually etc.
Yes, that's because I said the exact opposite of what I intended.
Replace "income" with "accumulation" - in fact, I'll go back and edit, but leave this here as evidence of how sloppy I can be at times!I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
You're all losing me with all this talk of dividend calculators etc.
I really don't see why it has to be so complicated.
You invest in a bunch of shares that track the index and get the dividends and (hopefully) growth derived from those shares.
It seems the only way to do this is to hold individual shares.
Afwone, your post resonates with me.
How much percentage wise of the FTSE100 would I be holding with these 5 diverse shares.
I could buy £2000 worth of each of them and then speculate with the other 5K
That way I'd have a "tracker approximation" for (0.5% x£10K =£50 + 5x £10 dealing charges) = £100 total charges.
I appreciate that people reading this have far mor knowledge/experience than me so please feel fre to shoot me down.0 -
Seems to me the whole story with a tracker should be told by the tracking error. Since this compares what you actually get with a hypothetical perfect tracker, it will incorporate not only explicit charges but also trading costs, the cost to the investor of any shortcuts they use, e.g. derivatives, any dividends they steal, any fingers in tills, etc. Nowhere to hide really.how do you know you'r not being diddled?"It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
I was reading recently that 90% of all the income from the FTSE 350 comes from just 9 shares. And of course there are similar stats for market cap.gadgetmind wrote: »It might sound harsh, but 5 shares isn't enough, and even 15 to 20 holdings is a "conviction" portfolio.
This seems to say that tracking the LSE is a conviction portfolio. It's not going to provide the low volatility or high diversity that people think they buy trackers for."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
You invest in a bunch of shares that track the index and get the dividends and (hopefully) growth derived from those shares.
It seems the only way to do this is to hold individual shares.
no, you get that with a tracker, too (... well, unless it's a synthetic ETF).
if the tracker has "income units", you actually get the cash dividends. if it has "accumulation units", you don't, because the dividends are automatically used to buy more shares.
i admit the tracker is a bit harder to understand, but once you do, it is doing the same thing.0 -
I was reading recently that 90% of all the income from the FTSE 350 comes from just 9 shares. And of course there are similar stats for market cap.
This seems to say that tracking the LSE is a conviction portfolio. It's not going to provide the low volatility or high diversity that people think they buy trackers for.
this is more an argument for buying overseas equities, too, rather than an even more concentrated (than the FTSE all-share index*) portfolio of LSE equities.
*the all-share being the broadest-based index of LSE shares0 -
You're all losing me with all this talk of dividend calculators etc.
I really don't see why it has to be so complicated.
You invest in a bunch of shares that track the index and get the dividends and (hopefully) growth derived from those shares.
It seems the only way to do this is to hold individual shares.
Afwone, your post resonates with me.
How much percentage wise of the FTSE100 would I be holding with these 5 diverse shares.
I could buy £2000 worth of each of them and then speculate with the other 5K
That way I'd have a "tracker approximation" for (0.5% x£10K =£50 + 5x £10 dealing charges) = £100 total charges.
I appreciate that people reading this have far mor knowledge/experience than me so please feel fre to shoot me down.
I think you are confusing yourself and everybody else by talking about trackers. The 5 shares bought in equal value tranches seem a reasonable starter set of shares for a small share based portfolio. But they are not a tracker approximation, the only link with a tracker is that they are large companies whose shares are traded on the London Stock Exchange. Forget about trackers, think more about a portfolio of shares.
What comments can one make about them as a set of shares? The major issue I see is with diversification:
1) Having only 5 shares is rather risky. One drops catastrophically and that's 20% of your portfolio. So think what happened recently to BP. Think about Glaxo - a massive and highly successful company, but its success is highly dependent on the development of new drugs as after a fairly small number of years the patents cease to apply. There is a real risk that Glaxo cannot create sufficient new drugs to replace the income it is losing as patents expire.
2) The global spread is limited. Most of the global influence comes from extractive industries. What about the rapidly expanding economies of the Far East, South America etc? What about the largest economy in the world, the USA?
3) All the companies are already major players in their sectors. So their opportunities for growth are limited. An ideal portfolio would have a spread of company sizes.
4) The sector spread is limited. Where for example are manufacturing, electronics, retail, utilities etc etc?
An important reason for investing in funds rather than shares is that the small investor can avoid the dangers of lack of diversification as the fund can invest in a very wide range of shares.
I would suggest you think more about what you are investing in and why than charges. Charges are important but only after you know what things you want to invest in. Dont let a worry about charges stop you from investing in the things you believe you should be investing in.
However at this stage I think you should stop thinking too much and start investing. Its early days and I would say that the education and experience you gain is going to be worth more than the immediate returns.0 -
.......
This seems to say that tracking the LSE is a conviction portfolio. It's not going to provide the low volatility or high diversity that people think they buy trackers for.
I agree completely. If you were constructing the ideal share portfolio would you really base your choice on the largest 100 companies that happened to trade their shares on a single stock exchange, the sector allocation of the FTSE, and set up a 50-fold range of size of investments in individual companies?0 -
If you were constructing the ideal share portfolio would you really base your choice on the largest 100 companies that happened to trade their shares on a single stock exchange,
No, but that's because the benefits of more international exposure, holdings of mid/small caps, and a "value" tilt have been demonstrated enough for me to adopt a more diverse strategy.
BTW, I have never seen a good argument for trackers having lower volatility than all but the most concentrated of portfolios. Let's face it, over recent years, pretty much everything with a high equity percentage has come out high on the volatility/risk scale.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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