Vanguard Funds

Zero_Sum

ColdIron wrote: »

There is no 'bump' as such, certainly not on the payment date. What class of units do you have? If you buy before the ex date you have the right to the dividend but you have also essentially purchased that dividend as it's in the price. If we ignore changes in the unit price due to market movements: Acc: the price won't change on the ex date. Inc: you get the rights to the dividend (that you bought) and the unit price decreases. Your dividend payment will turn up on the payment date. If you bought your Inc units on or after the ex date you buy at a cheaper price but don't have rights to the dividend

I have Accs, but surely there has to be a point when the divs are added in. Even if they do it once a month or whatever or is it just spread out over every working day?

Audaxer

Zero_Sum wrote: »

I have Accs, but surely there has to be a point when the divs are added in. Even if they do it once a month or whatever or is it just spread out over every working day?

As I understand it, the dividends of the individual investments are retained within the funds and are reflected in the unit price, but at ex-div date the INC fund manager takes the dividend amount out of the fund to be paid on dividend date, so the INC price is reduced on ex-div date by the percentage amount of dividend to be paid. Whereas with the ACC funds the dividends accumulated from the investments are not taken out the fund so the price is not reduced.

londoninvestor

Zero_Sum wrote: »

I have Accs, but surely there has to be a point when the divs are added in. Even if they do it once a month or whatever or is it just spread out over every working day?

There are a couple of concepts here:

1. When do the dividends start being counted in the NAV? As soon as the underlying company goes ex-dividend - so it depends what date those underlying companies pay dividends. Of course, the underlying company's share price will change by roughly the amount of the dividend, so you shouldn't expect this to really bump the NAV of the fund.
2. When are you deemed for tax purposes to have received the dividend? The same day that Inc unit holders receive their actual cash (usually annually, 6-monthly or quarterly - you can see it in the fund's documents or on Trustnet etc). However there's no change in the NAV on that date.

londoninvestor

Audaxer wrote: »

As I understand it, the dividends of the individual investments are retained within the funds and are reflected in the unit price, but at ex-div date the INC fund manager takes the dividend amount out of the fund to be paid on dividend date, so the INC price is reduced on ex-div date by the percentage amount of dividend to be paid. Whereas with the ACC funds the dividends accumulated from the investments are not taken out the fund so the price is not reduced.

That's right.