I’ve checked my IBKR activity report for the whole year 2022. I’m just holding one ETF which is Vanguard VWRA (accumulating dividends).
Now I’ve wondererd where I can see the payed dividends which I could not find. I guess the dividends should be marked with code “R” in the activity report. Vanguard pays dividends quarterly so there should be some dividends on my activity report from my understanding.
In case there are no dividends because it’s an accumulating ETF the amount of shares should have changed at least slightly which is not the case.
Thanks in advance for your help
AgentNullNullFalse
IBKR doesn’t list dividends of accumulating ETFs in their activity statement. That’s presumably the same for most if not all brokers outside of generated (Swiss) tax reports. As far as I know, brokers don’t directly get that information as it doesn’t affect the account, unlike dividends that are distributed.
You can check ICTax to get information about accumulated dividends. It’s typically (or always) a single entry per year.
Dividends in accumulating ETFs don’t affect the number of shares you hold. Each share is simply gaining worth (compared to the price index) as the fund’s holdings pay out dividends to the fund.
Thanks a great answer! Thanks a lot. Also the ICTax link is very useful.
What I haven’t understood is how each share can gain worth. The price of a share should be always the same at a certain point in time. How can a share gain worth? Isn’t the ticker price the real worth of a share?
Not necessarily - even investment funds can trade at discounts or premiums to NAV (or “real worth”, if you will).
Exchange-traded index funds however are designed to replicate the underlying index and its composition and performance very closely - as they may change over time. Their trading activity is bound by developments in the stock markets and the underlying index they strive to replicate - as opposed to other investment funds that employ a discretionary trading/investing strategy.
Furthermore, market making guarantees that you can buy or sell fund shares at a fair price through exchanges basically all the time.
The particular construction of such funds ensures that there’s only minimal divergence from their “real worth”.
Say an ETF has issued 10’000 shares overall to shareholders like you and me, and we both own one share, each representing 1/10’000 of the “big pot” the ETF is holding and managing for us.
As our ETF (assuming it’s perfectly physically replicating) receives dividend distributions from the shares it holds, it will immediately use the funds received to buy more securities of the companies in the index it’s tracking. That goes into the “big pot”.
We still each own one share of the ETF (out of still a 10’000 overall). But the total worth of that big pot will have grown (slightly). And so will the worth of our shares - which will be expressed by a rise in the price per share.
Side note: could the ETF also just change the number of your shares instead, to reflect the growing big pot? In principle yes. Some individual companies actually do this sometimes. But in the case of a fund holding a myriad of other companies’ shares and receiving distributions countless times a year, the bookkeeping would just get extremely messy for everyone. Just imagine doing your tax return on that!
Thanks for your explanation. I think I’ve learned something new
> which will be expressed by a rise in the price per share.
So my shares should have a higher price than the ticker price. I really have a hard time to find the higher price in the IBKR UI portfolio or reports.
If I divide the displayed market value of all VWRA shares in my portfolio and divide it by the amout of shares I’m holding, the price per share is even a bit smaller than the market price per share. Any idea where to find the higher share price (or gains per share) on IBKR?
The only way to find out how much gains I’ve made is ICTax I guess. So the tax office knows better than me about my financial situation IBKR UI has a lot of space to improve.
Best regards
PS: After some digging I think I’ve understood that the gains of the accumulating ETF (VWRA in this case) are re-invested into the “big pot”. This should result in a higher price compared to VWRD (distributing version on VWRA). But the opposite is the case:
Shouldn’t the VWRA always have a higher price than VWRD because the gains are going to the pot? I guess the price just reflects the demand of the share. If so, wouldn’t be the VWRD maybe be the better option as I don’t put the gains “at risk”?
Market price fluctuates slightly around the NAV but the difference is typically very small and it’s not related to dividends. When the ETF receives dividends from its holdings, the NAV increases and the market price increases as well due to the higher NAV.
You can’t directly compare one share of VWRA with one share of VWRD. VWRA only exists since July 2019 while VWRD has been available since May 2012. When the VWRA subfund was created, each share was worth USD 80 while a VWRD share was worth USD 87.31, 9.1% more. As you can see, one share of VWRA has come significantly closer to one share of VWRD due to the accumulated dividends but it hasn’t closed the difference just yet. One share of VWRA will likely be worth more than one share of VWRD within a couple of years.
What would you do with the dividends distributed by VWRD? If you would immediately reinvest the dividends in VWRD, VWRA is better (as you avoid transaction costs and spread). If you want to do something else with the received dividends, sure, VWRD may make more sense.
Alright jay, this was the missing puzzle piece to understand how things work. There are many videos on YouTube telling you that accumulating ETF invest in new shares in your portfolio which obviously is not always the case.
I’ve just checked the historical data VWRA vs VWRD regarding the returns of both ETF which seems to be quite similar. So I guess the VWRA is just more convenient for long term hodlers.
Keep in mind that the initial share price a of unit of VWRA or VWRD upon inception is arbitrary. If your fund starts out with a 1’000’000 CHF of investments in the “big pot”, they can choose any price:
1’000’000 ETF shares at 1 CHF/share
100’000 ETF shares at 10 CHF/share
10’000 ETF shares at 100 CHF/share
It doesn’t matter. (Well, they are going to choose it within reasonable parameters of the stock exchange. They likely aren’t going to sell a single share for a 100’000 CHF).
Crucial difference:
They aren’t reinvesting in new shares in your portfolio. You won’t be receiving new shares.
They are reinvesting in new shares in their portfolio. The stocks that the fund is holding.
Technically, the (anticipated) dividend will typically be priced into the underlying holding’s share price - which will, ceteris paribus, decrease at the ex-dividend date.
Thanks a lot for your explanations. That was crucial to understand how such accumulating ETFs work!
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IBKR UI has a lot of space to improve.
It doesn’t matter. (Well, they are going to choose it within reasonable parameters of the stock exchange. They likely aren’t going to sell a single share for a 100’000 CHF).