Vanguard LS Funds Dividend Payments

jim8888

I have most of my DC pension sitting in a Vanguard LS 80/20 index fund and have had for some years. Most years in March/April the funds seem to take a surge forward, and I wondered if this is anything to do with dividend payments being reinvested into the funds? It seems to move ahead more than the markets, and I've always wondered what happens with the dividend reinvestment into these type of funds. I Googled it but didn't find a clear answer as to how dividends are reinvested into tracker funds. Is it just an ongoing process, or is it done monthly, quarterly or what?

Fly100

They normally need reinvesting as mine appear as cash in my Pension account.I normally let them build to a £100 or so then just top up in whole units. Hope that makes sense.

Fly

Albermarle

Fly100 said:

They normally need reinvesting as mine appear as cash in my Pension account.I normally let them build to a £100 or so then just top up in whole units. Hope that makes sense.

Fly

If you have the INC version of the fund , then you will be paid in cash as you say .

However if you have the ACC version, which is what the OP seems to have , the dividends are kept within the fund .

P933alilli

Hi, hope i can ask a question regarding dividends? In the distributions tab of my VLS60 acc fund the yield is shown as 1.17% as at close 28th february! Is this the date when the dividend is paid or something else? And will 1.17% be the dividend applied to the capital invested or on top of any gain or loss? Thanks!

Audaxer

jim8888 said:

I have most of my DC pension sitting in a Vanguard LS 80/20 index fund and have had for some years. Most years in March/April the funds seem to take a surge forward, and I wondered if this is anything to do with dividend payments being reinvested into the funds? It seems to move ahead more than the markets, and I've always wondered what happens with the dividend reinvestment into these type of funds. I Googled it but didn't find a clear answer as to how dividends are reinvested into tracker funds. Is it just an ongoing process, or is it done monthly, quarterly or what?

I think that in the ACC versions of the VLS funds the dividends received will be re-invested within the fund on an ongoing basis. In the INC versions, the dividend amount will be taken out of the fund on ex-div date, which is 1 April, and paid out as dividends on 28 May.

Notepad_Phil

Collyflower1 said:

Hi, hope i can ask a question regarding dividends? In the distributions tab of my VLS60 acc fund the yield is shown as 1.17% as at close 28th february! Is this the date when the dividend is paid or something else? And will 1.17% be the dividend applied to the capital invested or on top of any gain or loss? Thanks!

If you have the Acc version of VLS60 then the dividends are all added to the fund itself and you won't actually get a specific dividend.

If you had the Inc version of VLS60 then the dividend would be paid out on the 28th May 2022.

I think the yield you are seeing is the historic yield i.e. the amount of dividends paid over the last year divided by the unit price of the fund on the 28th February (if you look again in a months time then it will probably show the yield as of the end of March), you cannot use it to calculate the dividend amount that will be paid in May.

Audaxer

I see that on the Vanguard site, it now shows that on VLS60 INC a dividend of £2.6132 per unit will be paid on 28 May. That is a bit higher than last year's dividend. 

P933alilli

Thanks, so if the dividend is added to the fund in May there may be an upsurge in performance for that Month all things being equal, although it probably wont be noticeable?

Audaxer

Collyflower1 said:

Thanks, so if the dividend is added to the fund in May there may be an upsurge in performance for that Month all things being equal, although it probably wont be noticeable?

If you have the ACC version of the fund, the dividends received are reinvested on an ongoing basis, so you shouldn't notice an upsurge in May for that reason. Whereas with the INC version the dividend amount is deducted from the fund balance on ex-div date and paid to holders at the end of May.

Thrugelmir

Collyflower1 said:

Thanks, so if the dividend is added to the fund in May there may be an upsurge in performance for that Month all things being equal, although it probably wont be noticeable?

Cash that the fund holds is already accounted for. As forms part of the fund valuation. There's no new money. 

P933alilli

Ok, thanks!