ETF VAS ETF latest dividend

Vanguards ASX 300 index VAS paid around 20 cents for the latest dividend in the quarter July 2016. This is significantly lower than what they normally pay.

Can anyone explain why?

 

Doesn't it pay a few smaller ones and then a larger one or two in certain months?

 

Smaller yes, but not as small as this one. The small dividend is usually in the 50 cent range. I thought that the dividend payment was based off the dividend of the shares. This tells me otherwise.

 

For those interested, I called Vanguard directly. A larger than normal dividend was paid in the previous quarter to reduce CGT because a large investor sold a significant amount of VAS. This was then taken from the most recent dividend.

 

Ah the wonders of open-end funds.

 

I can't get my head around this - how does that work?

 

https://www.spdrs.com.au/education/files/The Role of SPDR ETFs in a Tax Efficient Portfolio.pdf

Uuuummmm, would seem to contradict this from above link:

 

I too haven't understood what I was told. I'm just transferring the message. It could be a case of lost in translation.

 

I was under the impression that this time they did not include the major bank dividends in the June Qtr dividend (not withstanding they all went ex-div in mid May).

Hence the divs relating to WBC, ANZ, NAB and MQG will all be paid in the September Qtr dividend.

 

You'd think that's normally the case. But I don't hold ETF's anymore so haven't paid much attention to recent distributions.

 

CBA might be in there too if the payment date is 30 September. Could be a whopper coming up for VAS...

 

Big difference to the norm..

VHY's distribution was also a lot less than its normal June amounts

VAS

• 30 Jun 2016 18.0775
• 31 Mar 2016 84.6678
• 31 Dec 2015 95.2639
• 30 Sep 2015 94.3797
• 30 Jun 2015 55.2457
• 31 Mar 2015 67.6919
• 31 Dec 2014 75.7108
• 30 Sep 2014 97.6640
• 30 Jun 2014 60.8063

Their top 10 holdings have stocks which have reduced their dividends (some markedly like BHP)

1. Commonwealth Bank of Australia
2. Westpac Banking Corp.
3. Australia & New Zealand Banking Group Ltd.
4. National Australia Bank Ltd.
5. BHP Billiton
6. Telstra Corp. Ltd.
7. CSL Ltd. 8. Wesfarmers Ltd.
9. Woolworths Ltd.
10. Macquarie Group Ltd.

The top 10 holdings represent 44.2% of the total ETF

<Edit>
Found this on HC

VAS is not a stand alone fund, it is a share class of an overarching fund which has their managed fund as a separate share class. It was the managed fund that suffered a very large redemption from an institutional investor. When managed funds get large redemptions, it can create taxation implications that can in turn impact distributions for the remaining investors. I would have thought that any significant redemption from the managed fund should have been quarantined, not flow over to the VAS ETF. Apparently not. The reference to the 'higher than normal distribution the quarter before' was poorly articulated (I had the same problem). It was a reference to that same quarter in the previous year, not the immediately preceding quarter.

Basically, it's just an example of the vagaries of a managed fund. Dealing with inflows and outflows creates issues with managing distributions. It is for this reason many investors prefer to invest directly or via LICs which have a closed pool of capital.

 

<Edit>
Found this on HC

VAS is not a stand alone fund, it is a share class of an overarching fund which has their managed fund as a separate share class. It was the managed fund that suffered a very large redemption from an institutional investor. When managed funds get large redemptions, it can create taxation implications that can in turn impact distributions for the remaining investors. I would have thought that any significant redemption from the managed fund should have been quarantined, not flow over to the VAS ETF. Apparently not. The reference to the 'higher than normal distribution the quarter before' was poorly articulated (I had the same problem). It was a reference to that same quarter in the previous year, not the immediately preceding quarter.

Basically, it's just an example of the vagaries of a managed fund. Dealing with inflows and outflows creates issues with managing distributions. It is for this reason many investors prefer to invest directly or via LICs which have a closed pool of capital.[/QUOTE]

I find this disturbing.....I would have thought the ETF was based on a separate pool of owners - as opposed to Unit Holders of a managed fund. Maybe I am missing something here?

 

I found this

Watch this three-minute video, which explains important differences between stand-alone and multiple-share-class ETFs.

Link

 

I find this disturbing.....I would have thought the ETF was based on a separate pool of owners - as opposed to Unit Holders of a managed fund. Maybe I am missing something here?[/QUOTE]

I haven't looked into the detail of the relationship but VGS ETF is linked to the wholesale managed fund. If you look at the following Vanguard VGS factsheet you will see ETF size and Total Fund Size. Many other ETFs are totally self contained so perhaps the above situation may not arise.

 

Good find, @Redwing.

And the transcript:

https://advisors.vanguard.com/iwe/pdf/standAloneTrans.pdf?cbdForceDomain=true

 

Thanks Redwing and Austing - just when I thought I was all over the ETF thing I find out something new. Austing I understand now why you have LICs as well.
Is there a LIC equivalent to VAS/VGS?

 

LIC substitutes for VAS include AFI / ARG in particular and MLT / AUI / BKI as close enough.

Not really any LICs that look like VGS.

Of course LICs have a different problem with discount / premium issues.

 

Subsequent updates after this event in Red