No UK equity income ETF

masonic

The underperformance of IUKD vs the Vanguard UK Equity Income fund comes down to the quality of the index: FTSE UK Dividend+ Index vs FTSE U.K. Equity Income Index. They are quite different.

The Dividend+ index is dividend weighted rather than market-cap weighted, limited to 50 consituents vs 100+, limited to FTSE350 members vs FTSE All-share.

Greater diversification and traditional market-cap weighting has paid off in this instance, but under different circumstances it could have been the other way around. But I'd class the ETF as more risky.

Each of the four available ETFs tracks a different index, none of which are the same as the Vanguard fund's. A valid question would be why Vanguard (or anyone) doesn't launch a new ETF tracking the same index. But looking at the size of the existing ETFs I could hazard a guess!

cloud_dog

As touched on, wouldn't it be better to look at ITs for the income assets due to income retention, distribution stability?

aroominyork

https://forums.moneysavingexpert.com/discussion/comment/81991431#Comment_81991431

Possibly if smooth income is critical, which it isn't for me. Only a few ITs have higher total return than Vanguard over ten years, and they had higher volatility, so the index fund seems a sound choice.