ETF vs OEIC yield / distributions

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tellme_why
tellme_why Posts: 54 Forumite
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in Savings & investments
Hi,
I compare

ETF: Vanguard FTSE All-World UCITS ETF

vs

OEIC: Vanguard Lifestrategy 100

Over period April 2017- April 2018

I notice:
1. OEIC Distribution is ~1.7%
2. ETF Distribution is ~0.1%
3. NAV history quite similar

Assume higher rate tax payer, tax on dividends (distribution) is on 1.7% of OEIC total value vs ~0.1% for ETF.

Is low divided yield a general feature of ETF as opposed to relatively high yield of OEIC?

Many thanks

Comments

  • ColdIron
    ColdIron Posts: 9,054 Forumite
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    I don't know where you are getting 0.1% from, according to Vanguard it's Yield As at close 31 Jan 2019 was 2.14%. BTW you are not really comparing like with like. The Lifestrategy is not a tracker and has different weightings. If you compared apples with apples I would expect the distributions to be similar

    https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing/distributions
  • Mr.Saver
    Mr.Saver Posts: 521 Forumite
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    Where did you get the 0.1% for the ETF?

    https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing/distributions

    It's clearly much higher than your number.

    Edit: Oops, I didn't read the reply from ColdIron. We wrote the same thing.
  • tellme_why
    tellme_why Posts: 54 Forumite
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    .. well thx I got it wrong .. I only considered one quarter :( yield is quite similar..to OEIC..
  • James_Green_1982
    James_Green_1982 Posts: 219 Forumite
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    May I ask;

    What is the difference between dividends and distributions?

    Thanks.
  • londoninvestor
    londoninvestor Posts: 1,350 Forumite
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    James_Green_1982 wrote: »
    May I ask;

    What is the difference between dividends and distributions?

    Thanks.

    A distribution is an umbrella term for a cash payment to shareholders in proportion to their shareholding. Often a distribution isn't a dividend, but sometimes it isn't :) It's mostly down to the tax treatment of the income.

    So a bond fund or bond ETF can pay a distribution which is treated for tax purposes like savings interest, rather than dividends.

    And property funds and REITs can pay distributions which are treated like direct income from property, rather than dividends.

    Occasionally (usually in a merger or restructuring situation) a company will distribute cash to shareholders that is treated as a return of capital. Somewhat similar to that is the way that fund / OEIC units behave in the first year you hold them - the distribution you receive is a mixture of dividend and "equalisation", which is treated as a return of capital.
  • James_Green_1982
    James_Green_1982 Posts: 219 Forumite
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    londoninvestor wrote: »
    A distribution is an umbrella term for a cash payment to shareholders in proportion to their shareholding. Often a distribution isn't a dividend, but sometimes it isn't :) It's mostly down to the tax treatment of the income.

    So a bond fund or bond ETF can pay a distribution which is treated for tax purposes like savings interest, rather than dividends.

    And property funds and REITs can pay distributions which are treated like direct income from property, rather than dividends.

    Occasionally (usually in a merger or restructuring situation) a company will distribute cash to shareholders that is treated as a return of capital. Somewhat similar to that is the way that fund / OEIC units behave in the first year you hold them - the distribution you receive is a mixture of dividend and "equalisation", which is treated as a return of capital.

    Thank you very much.
    So a dividend is a certain type of distribution?
  • londoninvestor
    londoninvestor Posts: 1,350 Forumite
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    James_Green_1982 wrote: »
    Thank you very much.
    So a dividend is a certain type of distribution?

    Yes that's right.
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