Vanguard FTSE All-World High Dividend Yield UCITS ETF

raghav.raman

Hello,

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-high-dividend-yield-ucits-etf-usd-accumulating/overview

I understand "Vanguard FTSE All-World High Dividend Yield" is bought for income.
But when should one consider buying the Accumulation version of this fund?

The "FTSE All-World High Dividend Yield" index has a value tilt, that could be a reason.
But if one is after value investing there are other funds, like the ones tracking "MSCI World Enhanced Value" index to consider.

I do realise the "FTSE All-World High Dividend Yield" index covers Emerging markets so a even broader universe, but comes with slightly expensive TER 0.04% more.

This fund is as volatile as a broad market index fund, so lower volatility cannot be the reason.

I look forward to your thoughts and observations.

Thanks in advance.

InvesterJones

raghav.raman said:

Hello,

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-high-dividend-yield-ucits-etf-usd-accumulating/overview

I understand "Vanguard FTSE All-World High Dividend Yield" is bought for income.
But when should one consider buying the Accumulation version of this fund?

When one wants to reinvest dividends and wants to avoid fees/time out of the market.

The "FTSE All-World High Dividend Yield" index has a value tilt, that could be a reason.
But if one is after value investing there are other funds, like the ones tracking "MSCI World Enhanced Value" index to consider.

I do realise the "FTSE All-World High Dividend Yield" index covers Emerging markets so a even broader universe, but comes with slightly expensive TER 0.04% more.

This fund is as volatile as a broad market index fund, so lower volatility cannot be the reason.

Reason for what?

kinger101

A typical reason for buy an accumulation version is that you'd like to keep vested in the ETF and don't want the hassle (and potentially expense) of executing this yourself.  Some people have a small proportion of income funds to generate fees to pay platform charges etc.

Wanting income might be a reason to go the the income version of this type of ETF, but it will have a very different make-up to say VWRP, in that it will lack;

(a) companies which have never made a distribution;
(b) companies that don't want to make a distribution because they want to focus on targeting growth;
(c) companies which prefer share buybacks over dividends. There are very many companies that do this, e.g, Apple.

Hence, the top three sectors in the high income fund are banking, energy and big pharma.

If you thought the tech sector was overheated but you still wanted to global diversified low cost ETF, this one might a good choice*.

Outside of a tax wrapper, all being equal, some investors might prefer the buyback over the dividend, as in many countries, capitals gains are taxed at a lower rate that income.

*disclosure - I think it probably is but my strategy isn't based on what I think so I'm sticking with VWRP.    

raghav.raman

InvesterJones said:

raghav.raman said:

Hello,

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-high-dividend-yield-ucits-etf-usd-accumulating/overview

I understand "Vanguard FTSE All-World High Dividend Yield" is bought for income.
But when should one consider buying the Accumulation version of this fund?

When one wants to reinvest dividends and wants to avoid fees/time out of the market.

The "FTSE All-World High Dividend Yield" index has a value tilt, that could be a reason.
But if one is after value investing there are other funds, like the ones tracking "MSCI World Enhanced Value" index to consider.

I do realise the "FTSE All-World High Dividend Yield" index covers Emerging markets so a even broader universe, but comes with slightly expensive TER 0.04% more.

This fund is as volatile as a broad market index fund, so lower volatility cannot be the reason.

Reason for what?

I should have been clearer, sorry.
I get dividends are reinvested in the accumulation version of the fund.

The very purpose of a High Dividend Yield fund is for income, so why buy the accumulation version of the fund.

One possible reason is to have a value tilt in the portfolio given the companies covered in this index.

But given there are indexes specifically meant for value factor investing like "MSCI World Enhanced Value" when should one consider  "FTSE All-World High Dividend Yield"

Hoenir

raghav.raman said:

InvesterJones said:

raghav.raman said:

Hello,

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-high-dividend-yield-ucits-etf-usd-accumulating/overview

I understand "Vanguard FTSE All-World High Dividend Yield" is bought for income.
But when should one consider buying the Accumulation version of this fund?

When one wants to reinvest dividends and wants to avoid fees/time out of the market.

The "FTSE All-World High Dividend Yield" index has a value tilt, that could be a reason.
But if one is after value investing there are other funds, like the ones tracking "MSCI World Enhanced Value" index to consider.

I do realise the "FTSE All-World High Dividend Yield" index covers Emerging markets so a even broader universe, but comes with slightly expensive TER 0.04% more.

This fund is as volatile as a broad market index fund, so lower volatility cannot be the reason.

Reason for what?

The very purpose of a High Dividend Yield fund is for income, so why buy the accumulation version of the fund.

Not neccessarily it's a way of investing in companies that distribute a high level of their profits.  Reinvesting the distributions results in a compounding of the returns. As further shares are bought in the underlying companies.  At different times different investment strategies pay off. 

raghav.raman

Hoenir said:

raghav.raman said:

InvesterJones said:

raghav.raman said:

Hello,

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-high-dividend-yield-ucits-etf-usd-accumulating/overview

I understand "Vanguard FTSE All-World High Dividend Yield" is bought for income.
But when should one consider buying the Accumulation version of this fund?

When one wants to reinvest dividends and wants to avoid fees/time out of the market.

The "FTSE All-World High Dividend Yield" index has a value tilt, that could be a reason.
But if one is after value investing there are other funds, like the ones tracking "MSCI World Enhanced Value" index to consider.

I do realise the "FTSE All-World High Dividend Yield" index covers Emerging markets so a even broader universe, but comes with slightly expensive TER 0.04% more.

This fund is as volatile as a broad market index fund, so lower volatility cannot be the reason.

Reason for what?

The very purpose of a High Dividend Yield fund is for income, so why buy the accumulation version of the fund.

Not neccessarily it's a way of investing in companies that distribute a high level of their profits.  Reinvesting the distributions results in a compounding of the returns. As further shares are bought in the underlying companies.  At different times different investment strategies pay off. 

Thanks.
Total Expense Ratio for the "Vanguard FTSE All-World High Dividend Yield" ETF is more than twice a broad market world index fund. Cumulative and Annualised returns are lesser too.
I am wondering when will a strategy making use a High Dividend Yield fund help.

InvesterJones

raghav.raman said:

Hoenir said:

raghav.raman said:

InvesterJones said:

raghav.raman said:

Hello,

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-high-dividend-yield-ucits-etf-usd-accumulating/overview

I understand "Vanguard FTSE All-World High Dividend Yield" is bought for income.
But when should one consider buying the Accumulation version of this fund?

When one wants to reinvest dividends and wants to avoid fees/time out of the market.

The "FTSE All-World High Dividend Yield" index has a value tilt, that could be a reason.
But if one is after value investing there are other funds, like the ones tracking "MSCI World Enhanced Value" index to consider.

I do realise the "FTSE All-World High Dividend Yield" index covers Emerging markets so a even broader universe, but comes with slightly expensive TER 0.04% more.

This fund is as volatile as a broad market index fund, so lower volatility cannot be the reason.

Reason for what?

The very purpose of a High Dividend Yield fund is for income, so why buy the accumulation version of the fund.

Not neccessarily it's a way of investing in companies that distribute a high level of their profits.  Reinvesting the distributions results in a compounding of the returns. As further shares are bought in the underlying companies.  At different times different investment strategies pay off. 

Thanks.
Total Expense Ratio for the "Vanguard FTSE All-World High Dividend Yield" ETF is more than twice a broad market world index fund. Cumulative and Annualised returns are lesser too.
I am wondering when will a strategy making use a High Dividend Yield fund help.

Unless you have a working crystal ball the only way to know for sure on the value vs growth scale is in hindsight. In recent history, growth has won, but that's only recent, and future performance doesn't necessarily stick to the same pattern.