ETF VGAD big dividend

Discussion in 'Shares & Funds' started by Zenith Chaos, 20th Jan, 2021.

Join Australia's most dynamic and respected property investment community
  1. Zenith Chaos

    Zenith Chaos Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    1,673
    Location:
    Sydney
    VGAD paid a very handsome dividend yesterday, significantly larger than the one paid by VGS, which theoretically holds identical shares, but is not currency hedged like VGAD.

    Therefore, assuming the hedging caused this dividend payout, was this the result of CGT on the hedging or something else?

    Thanks in advance.
     
    Redwing likes this.
  2. Hockey Monkey

    Hockey Monkey Well-Known Member

    Joined:
    22nd Oct, 2015
    Posts:
    1,132
    Location:
    Melbourne
    Yes and unfortunately as VGAD is not registered for ToFA, it is classed as a dividend rather a capital gain
     
    Zenith Chaos likes this.
  3. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,258
    Location:
    Australia
    If the history on the free websites is correct, it looks like VGAD did not pay any distributions for 2 years, while VGS has made distributions every quarter?
     
  4. Coota9

    Coota9 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,286
    Location:
    Melbourne
    I hold these shares and can confirm that their last dividend was paid in July 2018
     
  5. sfdoddsy

    sfdoddsy Well-Known Member

    Joined:
    19th Mar, 2019
    Posts:
    347
    Location:
    Sydney
    ETFs have to pay out income as it is earned (unlike LICs).

    So when VGAD makes a big gain due to the AUD going up vs the USD they have to pay it out.

    Previous large distributions coincide with previous large jumps in the AUD.

    VGS, on the other hand, pays distributions on realised capital gains and dividends.

    The same is true of other hedged funds.

    VIF, Vanguard's hedged international fixed interest fund paid out 9% last year.

    VAF, Vanguard's Australian fixed interest fund, paid 3%.

    Total returns were about the same.