Next divided for funds

bogleboogle

tcallaghan93 said:

tcallaghan93 said:

bogleboogle said:

tcallaghan93 said:

bogleboogle said:

@tcallaghan93 thanks for your reply. 

on the "Distributions" page it says "Yield As at close 30 Jun 2020 1.87%". Basically, my question is: where do I see this reflected in my account? At first I thought this means that on 30 Jun 2020 each account gets 1.87% invested into new units (so someone with £10,000 in GAC would receive £187 in new units), but it doesn't look like that's the case, so how does it work? 

/
Happy to help, this took me a while to get my head around too.
I wish it paid out 1.87% a month 😍
Sorry about the CAPS, they're for emphasis I just cba with italics
You've bought, I think, the accumulation shares class of the fund. The FUND, not the platform automatically reinvests the dividends WITHIN THE FUND without you ever seeing them in your account.
You won't see this in your account.
1.87% is the ANNUAL rate, and it's the FUND's dividend. This particular fund has decided to distribute annually because it's easier than paying out the dividends when it receives them because then it would literally be paying out tiny amounts of money everyday. Apple dividends one day, Toyota the next, Nestle the next... It would be impossible to manage that.
1.87%  the last dividend the fund paid out divided by the fund's price on 30/6/20.
If you look at the income share class (https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-inc/overview), look at the distribution amount of £2.443 and divide by the  price & performance NAV for 30/6/20 £128.32, the answer is 1.90%, exactly the same as on the distributions page.
The number for the accumulation fund, 1.87%, is always slightly different but this is just how that's worked out, it would never affect the actual return you get.
The GENERAL advice is if you're retired and you want the income, buy the income fund. If you're still saving up, buy the accumulation fund. But it's upto you you can do whatever you want, no right or wrong answers. And it won't make a difference, a retiree could just hold the acc fund and sell units for income. A saver could buy the Inc fund and use the dividends to buy another fund, or leave as cash, whatever you want.

Yes I have the accumulation fund. The fund reinvests the dividend within the fund (presumably on my behalf) but I don't see it reflected in my account anywhere? So how does it benefit me? I guess I still don't understand how it works - if the fund reinvests the yield/dividend automatically then I should see that reflected somewhere (e.g. the NAV, or me receiving more units), no?  

/
You buy £1,000 of the acc fund.
I buy £1,000 of the Inc fund.
Fund uses our £2,000 to buy a little piece of every publicly traded company in the world.
Companies pay fund dividends.
Fund uses dividends to buy more peices of companies.
Say in year 1 prices of companies shares grows 10% for example. Also in year 1, our £1,000 peices of the fund each receive £25 of dividends in total.
The acc fund prices goes upto £1125
The Inc fund price goes upto £1100 and pays me £25.
The unit price of the acc fund is now a little higher to reflect the fact that it has already used the dividends to buy more shares.
Were both £125 richer. Only difference is I have £25 cash you have an extra £25 already automatically in your acc fund.

/
If you compare the NAV of the acc/Inc versions of the fund you'll see that the acc version's Mac grows slightly faster than the Inc versions year on year. You don't receive more units in the acc fund, instead, the units become worth more. NB I think when the fund launched they set the unit price at £100 for both ACC and inc.
The difference is basically not a different investment it's just an instruction for the same investment "give me dividends!" or "re-invest my dividends!"
Imagine if you owned a share in Tesco and when they tried to pay you the dividend you said "oh no thanks that's ok guys, re-invest it on the business" and they used it to make the business more valuable like opening another shop.
That's kind of what you're doing with the acc fund. With the Inc fund you're saying "give me the cash and get back to work making do with the shops you already have."

I can see now that the income fund distinguishes between capital + income returns and the combined amount = the amount shown as the capital return on the accumulation fund. So that makes sense, thank you.

I'm wondering: if we know the date when the fund pays/invests the yield, can we identify the increase in the NAV by that amount on that day (+- market movement that day)? 

83705628

bogleboogle said:

tcallaghan93 said:

tcallaghan93 said:

bogleboogle said:

tcallaghan93 said:

bogleboogle said:

@tcallaghan93 thanks for your reply. 

on the "Distributions" page it says "Yield As at close 30 Jun 2020 1.87%". Basically, my question is: where do I see this reflected in my account? At first I thought this means that on 30 Jun 2020 each account gets 1.87% invested into new units (so someone with £10,000 in GAC would receive £187 in new units), but it doesn't look like that's the case, so how does it work? 

/
Happy to help, this took me a while to get my head around too.
I wish it paid out 1.87% a month 😍
Sorry about the CAPS, they're for emphasis I just cba with italics
You've bought, I think, the accumulation shares class of the fund. The FUND, not the platform automatically reinvests the dividends WITHIN THE FUND without you ever seeing them in your account.
You won't see this in your account.
1.87% is the ANNUAL rate, and it's the FUND's dividend. This particular fund has decided to distribute annually because it's easier than paying out the dividends when it receives them because then it would literally be paying out tiny amounts of money everyday. Apple dividends one day, Toyota the next, Nestle the next... It would be impossible to manage that.
1.87%  the last dividend the fund paid out divided by the fund's price on 30/6/20.
If you look at the income share class (https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-inc/overview), look at the distribution amount of £2.443 and divide by the  price & performance NAV for 30/6/20 £128.32, the answer is 1.90%, exactly the same as on the distributions page.
The number for the accumulation fund, 1.87%, is always slightly different but this is just how that's worked out, it would never affect the actual return you get.
The GENERAL advice is if you're retired and you want the income, buy the income fund. If you're still saving up, buy the accumulation fund. But it's upto you you can do whatever you want, no right or wrong answers. And it won't make a difference, a retiree could just hold the acc fund and sell units for income. A saver could buy the Inc fund and use the dividends to buy another fund, or leave as cash, whatever you want.

Yes I have the accumulation fund. The fund reinvests the dividend within the fund (presumably on my behalf) but I don't see it reflected in my account anywhere? So how does it benefit me? I guess I still don't understand how it works - if the fund reinvests the yield/dividend automatically then I should see that reflected somewhere (e.g. the NAV, or me receiving more units), no?  

/
You buy £1,000 of the acc fund.
I buy £1,000 of the Inc fund.
Fund uses our £2,000 to buy a little piece of every publicly traded company in the world.
Companies pay fund dividends.
Fund uses dividends to buy more peices of companies.
Say in year 1 prices of companies shares grows 10% for example. Also in year 1, our £1,000 peices of the fund each receive £25 of dividends in total.
The acc fund prices goes upto £1125
The Inc fund price goes upto £1100 and pays me £25.
The unit price of the acc fund is now a little higher to reflect the fact that it has already used the dividends to buy more shares.
Were both £125 richer. Only difference is I have £25 cash you have an extra £25 already automatically in your acc fund.

/
If you compare the NAV of the acc/Inc versions of the fund you'll see that the acc version's Mac grows slightly faster than the Inc versions year on year. You don't receive more units in the acc fund, instead, the units become worth more. NB I think when the fund launched they set the unit price at £100 for both ACC and inc.
The difference is basically not a different investment it's just an instruction for the same investment "give me dividends!" or "re-invest my dividends!"
Imagine if you owned a share in Tesco and when they tried to pay you the dividend you said "oh no thanks that's ok guys, re-invest it on the business" and they used it to make the business more valuable like opening another shop.
That's kind of what you're doing with the acc fund. With the Inc fund you're saying "give me the cash and get back to work making do with the shops you already have."

I can see now that the income fund distinguishes between capital + income returns and the combined amount = the amount shown as the capital return on the accumulation fund. So that makes sense, thank you.

I'm wondering: if we know the date when the fund pays/invests the yield, can we identify the increase in the NAV by that amount on that day (+- market movement that day)? 

/
Yes and no. With shares in the market, no, once the dividend is paid the price tends to move down by the corresponding amount. Some traders do this though, it's called dividend capture trading.
The Inc fund does the same.
The acc fund just accumulates dividends continuously so no.

bowlhead99

bogleboogle said:

I'm wondering: if we know the date when the fund pays/invests the yield, can we identify the increase in the NAV by that amount on that day (+- market movement that day)? 

Yes, that was the thrust of my response to OP as post #4 of the thread.

If you know when the fund goes 'ex-div' (ie the dividend is formally allocated to investors and the shares or units that investors hold in the fund are now suddenly valued without the right to receive the dividend because that period's dividend is 'locked in') then if there are both income and accumulation classes:

- an Inc class holder holder can figure out the amount of NAV movement for the fund for the day, by looking at the Acc's NAV movements, which doesn't change for the dividend amount on that day and is purely investment performance); they could compare their class's total NAV movement to the underlying fund  NAV movement to deduce the dividend that they will shortly be receiving;

- an Acc class holder can figure out the amount of theoretical (deemed but unpaid) dividend for the Acc class by looking at what dividend percentage was obtained on the Inc class.

83705628

bowlhead99 said:

bogleboogle said:

I'm wondering: if we know the date when the fund pays/invests the yield, can we identify the increase in the NAV by that amount on that day (+- market movement that day)? 

Yes, that was the thrust of my response to OP as post #4 of the thread.

If you know when the fund goes 'ex-div' (ie the dividend is formally allocated to investors and the shares or units that investors hold in the fund are now suddenly valued without the right to receive the dividend because that period's dividend is 'locked in') then if there are both income and accumulation classes:

- an Inc class holder holder can figure out the amount of NAV movement for the fund for the day, by looking at the Acc's NAV movements, which doesn't change for the dividend amount on that day and is purely investment performance); they could compare their class's total NAV movement to the underlying fund  NAV movement to deduce the dividend that they will shortly be receiving;

- an Acc class holder can figure out the amount of theoretical (deemed but unpaid) dividend for the Acc class by looking at what dividend percentage was obtained on the Inc class.

/
vanguard funds declare their dividend before the date of record/ex-div date anyway

Thrugelmir

bogleboogle said:

Hi, I have the FTSE GAC (Accumulation) - it says the yield as at 30th June 2020 was 1.87%. How does that work in terms of my holdings - I can't seem to see the 1.87% being paid? Is it just automatically re-invested in the fund? If so, wouldn't I expect to see a 1.87% in the NAV on that date? 
Thanks

The NAV of the ACC fund won't change. The fund itself will have accounted for any dividends or income accrued/paid as they are declared/received. The declared yield will simply be a notional figure for reference purposes as at that date.

aroominyork

wmb194 said:

Fidelity.co.uk also shows dividend data for the funds it has. For the funds I follow I've noticed that it often has dividend data before Trustnet.

You're right! They show the 31 July (ex-div 1 July) dividend https://www.fidelity.co.uk/factsheet-data/factsheet/IE00B7FGDC41-lindsell-train-japanese-equity-fund-b-sterling-quoted-distributing/dividends

bogleboogle

Thrugelmir said:

bogleboogle said:

Hi, I have the FTSE GAC (Accumulation) - it says the yield as at 30th June 2020 was 1.87%. How does that work in terms of my holdings - I can't seem to see the 1.87% being paid? Is it just automatically re-invested in the fund? If so, wouldn't I expect to see a 1.87% in the NAV on that date? 
Thanks

The NAV of the ACC fund won't change. The fund itself will have accounted for any dividends or income accrued/paid as they are declared/received. The declared yield will simply be a notional figure for reference purposes as at that date.

Why doesn't the NAV change? And if the NAV doesn't change, how does the dividend yield benefit me in any material way?

83705628

bogleboogle said:

Thrugelmir said:

bogleboogle said:

Hi, I have the FTSE GAC (Accumulation) - it says the yield as at 30th June 2020 was 1.87%. How does that work in terms of my holdings - I can't seem to see the 1.87% being paid? Is it just automatically re-invested in the fund? If so, wouldn't I expect to see a 1.87% in the NAV on that date? 
Thanks

The NAV of the ACC fund won't change. The fund itself will have accounted for any dividends or income accrued/paid as they are declared/received. The declared yield will simply be a notional figure for reference purposes as at that date.

Why doesn't the NAV change? And if the NAV doesn't change, how does the dividend yield benefit me in any material way?

/
Look, you get the dividends either way. Do you really believe that Vanguard keep the dividends and don't pay them to you? Of course not! The additional return from the dividends is already included in the acc fund's returns.

masonic

bogleboogle said:

Thrugelmir said:

bogleboogle said:

Hi, I have the FTSE GAC (Accumulation) - it says the yield as at 30th June 2020 was 1.87%. How does that work in terms of my holdings - I can't seem to see the 1.87% being paid? Is it just automatically re-invested in the fund? If so, wouldn't I expect to see a 1.87% in the NAV on that date? 
Thanks

The NAV of the ACC fund won't change. The fund itself will have accounted for any dividends or income accrued/paid as they are declared/received. The declared yield will simply be a notional figure for reference purposes as at that date.

Why doesn't the NAV change? And if the NAV doesn't change, how does the dividend yield benefit me in any material way?

As mentioned in the post you quoted, the dividends trickle in over time. They are not held back in cash and credited once or twice a year as is the case for an income unit class. The NAV does change, but the increases are frequent and small.

bogleboogle

masonic said:

bogleboogle said:

Thrugelmir said:

bogleboogle said:

Hi, I have the FTSE GAC (Accumulation) - it says the yield as at 30th June 2020 was 1.87%. How does that work in terms of my holdings - I can't seem to see the 1.87% being paid? Is it just automatically re-invested in the fund? If so, wouldn't I expect to see a 1.87% in the NAV on that date? 
Thanks

The NAV of the ACC fund won't change. The fund itself will have accounted for any dividends or income accrued/paid as they are declared/received. The declared yield will simply be a notional figure for reference purposes as at that date.

Why doesn't the NAV change? And if the NAV doesn't change, how does the dividend yield benefit me in any material way?

As mentioned in the post you quoted, the dividends trickle in over time. They are not held back in cash and credited once or twice a year as is the case for an income unit class. The NAV does change, but the increases are frequent and small.

This post made a lot of sense - thank you!

Tcallaghan - I'm not saying it's a conspiracy, but... Thanks