Are dividends reinvested faster with accumulating ETFs?


#1

I wonder if accumulating ETFs outperformed distributing ETFs because dividends are invested faster?

Let’s assumed an ETF with three companies: A, B and C.
Company A gives dividends on 30.01.2018
Company B gives dividends on 15.02.2018
Company C gives dividends on 25.02.2018

The distributing ETF will give the dividends to the investor on the 27.03.2018 and the investor buys more shares when the money is available on their account.
Does it mean dividends of company A are waiting from the 30.01.2018 to the 27.03.2018 (same for other companies) on the ETF provider account without interest to be distributed?

Does the accumulating ETF reinvest directly after the dividends distribution by the companies?


#2

So pull some data and plot us some charts will ya

Some ETFs reinvest dividends between receiving them and paying out, not just keep sitting on cash


#3

yeah, it’s quite challenging because the difference could be due to the TER, fund size or the the tracking error.

In the case below on 5 years, the distributing ETF has a return of 7.87% vs 8.09% for the accumulating.

iShares Core S&P 500 UCITS ETF USD
(Dist)
https://www.justetf.com/servlet/download?isin=IE0031442068&documentType=MR&country=UK&lang=en
iShares Core S&P 500 UCITS ETF USD
(Acc)
https://www.justetf.com/servlet/download?isin=IE00B5BMR087&documentType=MR&country=UK&lang=en


#4

@hedgehog is there an easy way to have a shared notebooks for the forum? It will be surely better than copypasting screenshots.

@_MP hosting jupyter ?


#5

You could use colab or something. Or upload whereever and link thorough nbviewer.jupyter.org


#6

nbviewer is read only, great for showing stuff, less great if we need to collaborate.

But yes, we might make a github repository for all the stuff we want to share and use nbviewer or github itself to show it.


#7

@ma0 not planned to add more tools yet.
We discussed the wiki option at some point but found that the Discourse wiki type of post is enough.

What is your real need with Jupyter or similar?


#8

There isn’t a real need. I’ve only noticed that some people explain us the market using formulas and calculations with python, and I thought it would have been cool to show them online rather than copypasting them as images.


#9

In theory it is reinvested directly but I do not know if they try to time the market or at least the sector of the market which the cheapest at the time of the dividend.
In my case I took some accumulating ETF because the TER was lower than distributing ETF. However this is not always the case.
I have others arguments, I do not like accumulating ETF and ETF that distribute the dividend only once per year because if you buy it few weeks before the distribution you have to pay tax on the dividend and that can eat 1% of the value. This effect is negligible with ETF that distribute the dividend each trimester.