Do performance charts strip out ex-div price deductions?

aroominyork

I recently bought two chunks of Royal London Short Duration Credit, M Inc class: on 16 December at 102.8p and on 17 January at 103.6p. As of last night the unit price was 102.2p, yet if you look at the performance chart the price has clearly risen, not fallen, since I bought them. How come?

(I'm crap at embedding images so please click here...) https://imgur.com/a/RkmAChx

Is the answer something to do with the fund having gone going ex-dividend on 1 February with an expected yield just over 3% (split over two distributions), and the price reduction on the day it went ex-dividend somehow being stripped out of the performance chart?

ColdIron

You bought at 102.8 and 103.6 and then it rose to over 104 before ex div when it dropped to 102.2 to reflect the dividend as you would expect. When looking at the Inc class make sure your charts show price and not the total return. If you compare the Inc class with the Acc class you should see a clear split between the classes

Have a look at Trustnet. Set the Timescale to 3 months and the Chart Basis to Without income reinvested
https://www2.trustnet.com/Tools/Charting.aspx?typeCode=O_FJPBR

aroominyork

Thanks ColdIron - that's great. This link shows the Inc class without income reinvested, and the Acc class. So presumably when the fund goes ex-div, the HL chart (or Trustnet 'with reinvestment') estimates the payment that will be made at the next distribution date?

ColdIron

For some reason I can't see your images, but no need for an estimate, the dividend (in pounds and pence per unit or share) will have been declared so will be known

PS HL's default chart basis for funds is total return but there is a Price radio button and a Display price rather than percentage checkbox that shows price rather than total return

aroominyork

Yes, I see HL's price & total returns buttons. Thanks, I hadn't noticed before.

So, is the dividend announced on the date a stock/fund goes ex-div?

(I think I'd hidden the images - now hopefully rectified but as you say, ColdIron, you are answering perfectly wihtout them.)

ColdIron

From memory, on the announcement or declaration date the size of the dividend, the record, payment and ex dividend dates are declared which by necessity must be before the ex div date. You should see them in any RNS (Regulatory News Service) feed. You can sign up to these alerts with HL but be warned there are a lot of them

Linton

The HSBC website shows their dividend announcement about a week before the ex-div date.

aroominyork

ColdIron wrote: »

From memory, on the announcement or declaration date the size of the dividend, the record, payment and ex dividend dates are declared which by necessity must be before the ex div date. You should see them in any RNS (Regulatory News Service) feed. You can sign up to these alerts with HL but be warned there are a lot of them

I've never heard of RNS. Is there a link you can send where I can see, for example, the 31 March 2020 divided for the RL fund I hold?

Linton wrote: »

The HSBC website shows their dividend announcement about a week before the ex-div date.

Interesting. So you can decide whether to buy the stock the date before it goes ex-div if you like the look of the dividend?

ColdIron

aroominyork wrote: »

I've never heard of RNS. Is there a link you can send where I can see, for example, the 31 March 2020 divided for the RL fund I hold?

On reflection funds don't issue RNS announcements, only shares, so you would need to dig around the Royal London site. Trustnet or even Fidelity are useful for fund dividend distributions but neither show the recent dividend yet

Interesting. So you can decide whether to buy the stock the date before it goes ex-div if you like the look of the dividend?

The problem with buying close to the ex dividend date is that you are buying the (soon to be distributed) dividend as it is included in the price. There would be little point

Reaper

aroominyork wrote: »

Interesting. So you can decide whether to buy the stock the date before it goes ex-div if you like the look of the dividend?

Typically the day it goes ex-dividend the price will drop by an equal amount making it pointless.

In theory you might prefer to buy a share just before ex-dividend to minimise future gains affecting capital gains tax, or after to skip the dividend and minimise income tax. However the difference is so marginal I've never bothered.

aroominyork

Reaper wrote: »

Typically the day it goes ex-dividend the price will drop by an equal amount making it pointless.

In theory you might prefer to buy a share just before ex-dividend to minimise future gains affecting capital gains tax, or after to skip the dividend and minimise income tax. However the difference is so marginal I've never bothered.

And I've haven't owned a share (outside funds) for over 30 years and don't intend to start now. (Of course I planned to fill up on Tesla six months ago but never got round to it...). But this is just about whether the dividend of a stock or fund is announced i) before it goes ex-div, ii) at the time it goes ex-div, iii) at the date of distribution or iv) another time.