Active vs Passive Funds

ColdIron

Because it is full of mature industries with low prospects of growth so chooses to reward it's investors with high dividends instead

Thrugelmir

AsifM068 said:

Is there anything glaringly wrong with this selection / strategy please?

Does it meet your risk profile? 

AsifM068

Yes - meets current risk profile with the premium bonds 'cash' hedge.

Linton

AsifM068 said:

Slightly off topic team but why is the UK renown for high dividend investments / stocks or have I got this wrong? 

As ColdIron says.  Also there is a long-standing culture of wealthy people gaining income from dividends.  The UK is not unique.  In the Far East investors like dividends.

The US is different, they generally prefer capital gains.  It may be partially cultural but taxation rules play a major role.  I believe dividends are more highly taxed than Capital Gains and US investor access to tax free environments like ISAs is more restricted than in the UK

Linton

Thrugelmir said:

Prism said:

tebbins said:

Linton said:

AsifM068 said:

Why did the UK fare so poorly relative to the global market at the time?

The UK did not.  The problem is with the companies that make up the FTSE100.  It is unable to hold onto major growth companies.  Any like ARM which are or have a potential to be world leaders get taken over by foreign companies well before they form a significant part of the FTSE100.

I think at some point I'll have to do a thread correcting this very popular misconception. Take rerating and net equity issuance (i.e. S&P 500 buybacks exceeding dividends) out of it and the so-called lack of growth, as in actual earnings growth, you're seeing disappears.

In addition it scares off promising IPOs where the owners don't want to see a lower valuation just because its listed in the UK. So they IPO in the US instead.

Another myth. Listing requirements in the US are generally far laxer than the London markets. London might be small but it's highly regarded. Hence why companies such as Experian list here rather than the US. 

Yes, but companies like Experian arent going to be driving the FTSE100 to stratospheric heights.  The laxer rules of the US and the focus on Growth combine to give US investors the opportunity for very high returns which encourages more growth IPOs in the US - positive feedback. 

UK IPOs may be higher quality, however that isnt what the market is particularly interested in at the moment.

Thrugelmir

Linton said:

Thrugelmir said:

Prism said:

tebbins said:

Linton said:

AsifM068 said:

Why did the UK fare so poorly relative to the global market at the time?

The UK did not.  The problem is with the companies that make up the FTSE100.  It is unable to hold onto major growth companies.  Any like ARM which are or have a potential to be world leaders get taken over by foreign companies well before they form a significant part of the FTSE100.

I think at some point I'll have to do a thread correcting this very popular misconception. Take rerating and net equity issuance (i.e. S&P 500 buybacks exceeding dividends) out of it and the so-called lack of growth, as in actual earnings growth, you're seeing disappears.

In addition it scares off promising IPOs where the owners don't want to see a lower valuation just because its listed in the UK. So they IPO in the US instead.

Another myth. Listing requirements in the US are generally far laxer than the London markets. London might be small but it's highly regarded. Hence why companies such as Experian list here rather than the US. 

Yes, but companies like Experian arent going to be driving the FTSE100 to stratospheric heights.  The laxer rules of the US and the focus on Growth combine to give US investors the opportunity for very high returns which encourages more growth IPOs in the US - positive feedback. 

UK IPOs may be higher quality, however that isnt what the market is particularly interested in at the moment.

I'm far more interested in company fundamentals than the latest meme stock. That's just the Dot Com boom all over again. Investors buy into companies, speculators trade markets. There's certainly a fixation with the FTSE100 amongst amateur investors. Never understood why. Other than to provide confirmation bias for their own investing decisions. 

Ps  An investment in Experian would have returned a 103% over the past 5 years. 

Thrugelmir

AsifM068 said:

Slightly off topic team but why is the UK renown for high dividend investments / stocks or have I got this wrong? 

Taxation. In other countries dividends are taxed more highly than capital gains. In the US share buy backs are a mechanism , though this is clouded by the amount of debt now on company balance sheets. Buy a French share and you'll have 27.5% deducted before the dividend hits your share account. 

AsifM068

Thrugelmir said:

AsifM068 said:

Slightly off topic team but why is the UK renown for high dividend investments / stocks or have I got this wrong? 

Taxation. In other countries dividends are taxed more highly than capital gains. In the US share buy backs are a mechanism , though this is clouded by the amount of debt now on company balance sheets. Buy a French share and you'll have 27.5% deducted before the dividend hits your share account. 

27.5%! Wowsers that would hurt.

Thrugelmir

AsifM068 said:

Thrugelmir said:

AsifM068 said:

Slightly off topic team but why is the UK renown for high dividend investments / stocks or have I got this wrong? 

Taxation. In other countries dividends are taxed more highly than capital gains. In the US share buy backs are a mechanism , though this is clouded by the amount of debt now on company balance sheets. Buy a French share and you'll have 27.5% deducted before the dividend hits your share account. 

27.5%! Wowsers that would hurt.

I bought Total when it was yielding over 11% Still a decent net yield after tax. 

AsifM068

Deleted_User said:

AsifM068 said:

27.5%! Wowsers that would hurt.

If you think that would hurt, have you seen how much is deducted from your salary?

Guess we have it quite good in the UK.