Monkey-brain ETFs: Dividend ETFs

[Cyrus]

Personally felt in Love with my Monkey Heart Brain… Since last year…

Approx. 10-15%
CHDVD @ SQ
TDIV @ IB
UBS Global Quality Div. @ VIAC

[San_Francisco]

3-5% dividend yield? That’s kinda paltry and boring.

Just wait until you discover Business Development Companies - they’d make your go

[JEPG]

I knew there was a secret for becoming rich easily!

[clueless]

@clueless

Possibly a value orientated ETF would be better, but the selection of SCHD isn’t so much value but companies with a healthy balance sheet. They are less likely to reduce dividends in a crash relative to share price drops, so perhaps you still get a 3-3.5% yield.

As an example, as of time of writing I see my VT down 0.8%, but that is balanced by SCHD up 1.55%, SCHY up 1.15% and BRK/B up 2.8% so my portfolio is now up 0.21% today. I see this pattern quite a lot, and I think it is because the Mag 7 and tech have such a weight in VT that bad news in tech stocks often has a rotation to consumer stables, healthcare etc.

[Ilpiccone]

@clueless

In theory, there should be no benefit of a value ETF as the market is optimal

Factor investing theory says that certain systematic characteristics (“factors” like size, value, profitability, momentum) have delivered higher long-term expected returns than the broad market, historically and across markets.

Those higher expected returns usually come with higher risk, different risk, or periods of severe underperformance — which shows up as higher volatility, deeper drawdowns, or long stretches of disappointment.

So higher long term expected returns for value etfs can work aside efficient markets theory.

[cubanpete_the_swiss]

@JEPG

I knew there was a secret for becoming rich easily!

The mechanical SCHD methods seem to work better, goes through the roof at the moment:

@Ilpiccone

periods of severe underperformance

Somebody pointed to an UBS research paper which did analyze factors for the last 200 years or so. They all had periods of under performance, the one with the least of those periods was momentum. That is my experience too.

But then factors are a really nice vehicle to be combined. I use “value” and “momentum” in all my strategies, the dividend strategy uses “carry”. But I use the factors in a non-standard way, want to be original…

[JEPG]

I wasn’t exactly serious, very high yield products are rarely good strategies.