ETF Exchange Traded Funds (ETFs) 2015

Does this mean if I buy VAS before July 3 I will be eligible for dividends?

It takes into account the trade date and not the settlement date right?

 

I remember reading somewhere to only trade ETFs between 10am and 2pm as this is when the market makers are most active.

 

Liquidity is a non issue for the large ETFs...and not talking about a trading approach. This is for long term holders.

 

Looks like the shares need to be purchased at least the day before the ex div date to qualify for the dividend payment

 

Ok I've been tossing up between going with ETF's and LIC's (no reason why I can't invest in both but just a matter of where I start), and I think I'll go with ETF's. I like the idea of LIC's where you can have some really clever individuals buying on your behalf, but what if some of these superstars leave? I don't have the time right now to keep my finger on the pulse so it seems to me ETF's are even more passive than LIC's.

Also is it safe to assume that ETF's are never going to trade all that much lower than their NTA (compared to LIC's) because it's basically just an index fund?

 

So true.

 

Just looked it up, Vanguard has VTS, VAP and VGS on the ASX. Does this sound right or are there others? What is VGS anyway?

 

Hence the name 'ex dividend date'.....the first day a share trades after the dividend cut-off. Traders who have held the share for 45+ days can sell on ex date and still be eligible for the dividend. They then deploy their capital to the next share where they see value to pick up the next available dividend.

Although, there are some traders who take the trade on ex div date to pick up a share possibly 'cheap'. Look at VHY today....down more than $3 compared to its $2.70 dividend. This is where you can make a decent entry if you can wait out the 3-6 months before the next dividend.

pinkboy

 

Not quite, all being equal the share price drops by the amount of the dividend plus the value of the franking credits.

 

Even better for the 'Dividend Stripper'.


pinkboy

 

Why, the relationship between price and NAV remains the same

 

I would think that there is a lower risk with EFT’s than with LIC. I was one of the lucky ones that bought WAB in 2007. WAB was a small LIC with a yield of close to 10% for the last 5 years or so, I think run by Wilson Asset Management. WAB didn’t survive the GFC (I can’t find any trace of them). I sold out the moment they announced they stopped paying dividends jan 08. AFI kept paying dividends and survived. Lesson learned : if you want LIC, stick with the big ones, even if their dividend yield is only 3.5%.

I bought STW in june 08, and they kept paying dividends – it took until this year before the share price went back to, and over $51. I calculated the STW yield over the 7 years I have them, including their latest dividend : 4.2%/year, (closing price today$51.50, exactly what I paid 7 years ago). A result not to write home about, but I was ok to keep holding them as they were tracking the index..

The price of STW crashed during the GFC, but I think the NTA was in line with the index. WAB price went way below NTA. I've read that quite of the LIC’s are bought for yield and the moment yield suffers, investors leave in droves. I was a prime example of that.

 

Good point @filipw on LICs and performance (or yield) chasing....you need to know what you are getting. I had to look up WAB (Wallace Absolute Return). This article speaks to its demise... http://www.bloomberg.com/apps/news?pid=newsarchive&sid=apw.AAQMc5MU&refer=Australia

 

Hi Filipw

If you kept purchasing STW on a regular basis i.e.... monthly, bi-monthly, quarterly etc any idea what the performance/return would have been?

In June 2008 the ASX Accumulation Index was at 33,875

In June 2014 it was at 45,991

 

Ha Wallace, not Wilson, sorry Wilson Asset Management. Thanks Falcon, sobering reading. In the end I was lucky when I got out when i did.

 

Hi redwing, no idea. I know that the price dropped to around $33. Didn't have the stomach to keep buying. Got burned on the way down with direct stocks, which in the end got into tradinghalt and when they reopened had lost another massive % and did capital raisings at a fraction of the last price before trading halt. In case of STW that wouldn't have happened as it tracks the index, I believe or am I wrong ?

 

No idea about DCA into STW but overall performance (including dividends) according to sharesight:

2 years: 12.95%
1 year : 5.44%
6 months: 4.23%

Slight tangent but my best performing ETF to date has been IXJ but will be topping up my IEU next week. Very happy with dividends from WDIV at 8.4% last FY.

 

Just repeating this question (sorry!) - does anyone know the answer to this?

 

Hi Filipw

Just had a quick look back to June 08 with STW, its been underwater since its high point in Oct 2007 at around $65, but is up around 80% (plus dividends) since its low point in March 2009.

Regular Dollar Cost Averaging and/or rebalancing through the market crashes of September 2001,The Iraq War in 2002/2003 and the Global Economic Crisis in 2008/2009 would have added exponential growth to such an index tracker fund

I just read the below of cuffelinks

 

The answer is yes. Market makers ensure you won't pick up the major ETFs at any material discount or premium.