xgsd - any reasons not to buy?

m178591

Just wondered whether people who are more informed than I on ETFs can offer any especially important reasons why I shouldn’t buy xgsd.l?

https://etf.dws.com/en-gb/LU0292096186-stoxx-global-select-dividend-100-swap-ucits-etf-1d/

I’m in my early 50’s and gradually moving from buying growth to buying dividend. I’m after a global tracker dividend etf. I’m looking to buy the sorts of etf you can buy and forget about. I’m mostly interested in the dividend over the long term rather than share price growth. I am treating these as you would an annuity (I know they are quite different) in the sense once bought I am interested in the dividend and consider the investment money spent.

These will be in an ISA wrapper. I’m looking for any obvious reasons why I should avoid this ETF. They seem to me like a reasonably good option. At the moment the yield is about 10% and the dividend history seems fairly solid. What am I missing?

Thanks

wmb194

m178591 said:

Just wondered whether people who are more informed than I on ETFs can offer any especially important reasons why I shouldn’t buy xgsd.l?

https://etf.dws.com/en-gb/LU0292096186-stoxx-global-select-dividend-100-swap-ucits-etf-1d/

I’m in my early 50’s and gradually moving from buying growth to buying dividend. I’m after a global tracker dividend etf. I’m looking to buy the sorts of etf you can buy and forget about. I’m mostly interested in the dividend over the long term rather than share price growth. I am treating these as you would an annuity (I know they are quite different) in the sense once bought I am interested in the dividend and consider the investment money spent.

These will be in an ISA wrapper. I’m looking for any obvious reasons why I should avoid this ETF. They seem to me like a reasonably good option. At the moment the yield is about 10% and the dividend history seems fairly solid. What am I missing?

Thanks

From the factsheet, "

• The Fund will enter into a derivative with a counterparty. If the counterparty fails to make payments (for example, it becomes insolvent) this may result in your investment suffering a loss."

I rather funds actually own the securities they say they invest in.

gm0

Agree. 

I also prefer physical replication over synthetic contracts - the counterparty agrees to pay the calculated value as part of their trade book. 

It's all kittens and roses until the counterparty goes down in flames for whatever unrelated reason. 
And if it wasn't "rescued" in a way that makes everybody whole

There are other choices to find high dividend stocks or invest those indices albeit "flat" and cheaply.

Whether or not dividend champions is an appropriate investment approach in some markets is another whole conversation.  Some will be awesome businesses and some could be at a different lifecycle stage/more desperate.

Never say never - would not pass my personal screen.  And certainly not to go "all in" on.

EthicsGradient

I don't understand the factsheet. While it says the index at end of June was 18% USA, 15% Hong Kong, 14% Australia, the "Substitute Basket" was, at the end of August, 66% USA, 25% Denmark, 6% Switzerland ... and "Securities Holdings" seems to match that. Has the whole thing really changed that much in 2 months?

I also make the current yield about 7%, not 10%, and that's a high - the median since 2008 is, I think, 4.5%.