The Lemon Fool

Is there a higher yielding version of VEVE? I am aware that VEVE follows the developed world with a growth emphasis. However is there an equivalent developed world, but with an income emphasis, like VHYL is all world, higher yield?

I note VEVE's lower charges (than the All-world ETF's), so am looking for an equivalent lower charging but higher yield version.

VEVE is just a mindless tracker, you get growth more than dividends just because. If you want a dividend rich ETF, you are straying away from tracker territory.

Maybe look at Fidelity Global Quality Income UCITS ETF.
Various flavours such as dollar, & sterling, & GBP hedged, etc ...

Also maybe Wisdom Tree global quality dividend growth (GGRP). It yields 2.32% currently.

https://www.hl.co.uk/shares/shares-sear ... owth-ucits

Here is Monevator's comparison:

https://monevator.com/low-cost-index-trackers/

Market weighted trackers are cheap because they involve almost no trading. Income funds involve more trading and are more expensive. They are less diversified than the market weighted trackers, because the include only higher yielding stocks, and have provided lower total returns over the last decade or so, for what that is worth.

Thanks for the various replies. I (had) wanted to increase my global exposure with an emphasis on the US and maybe technology, so I thought VEVE would be an ideal low cost vehicle. However I was put off by the low dividend yield which that would entail (1.70%).

In the end I decided to stick with my existing holding of Alliance (ATST), (yield: 2.30% and at a discount) and JGGI, both of which I had topped up last month, .... and so keep my dry powder for a rainier day.

richfool wrote:Thanks for the various replies. I (had) wanted to increase my global exposure with an emphasis on the US and maybe technology, so I thought VEVE would be an ideal low cost vehicle. However I was put off by the low dividend yield which that would entail (1.70%).

What matters to me is total return. You will be paying withholding tax most of that dividend, and also dividend tax outside a UK tax shelter. The lower the dividend the batter as far as I am concerned. Vanguard Developed World ex UK has a lower dividend than VEVE (which includes the UK), so I use that outside a tax shelter. There are people here who are using more drastic measures to keep their dividend income down.

GeoffF100 wrote:

richfool wrote:Thanks for the various replies. I (had) wanted to increase my global exposure with an emphasis on the US and maybe technology, so I thought VEVE would be an ideal low cost vehicle. However I was put off by the low dividend yield which that would entail (1.70%).

What matters to me is total return. You will be paying withholding tax most of that dividend, and also dividend tax outside a UK tax shelter. The lower the dividend the batter as far as I am concerned. Vanguard Developed World ex UK has a lower dividend than VEVE (which includes the UK), so I use that outside a tax shelter. There are people here who are using more drastic measures to keep their dividend income down.

VEVE would have been held IN a tax shelter (in my ISA), so I don't think withholding tax would have applied. I was however, not sure if the dividends would be remitted in dollars and then exchanged by my investment manager, thus involving exchange rate spreads etc. However, as I am instead sticking with ATST and JGGI (investment trusts) (held in my ISA) I don't have to worry about either of the above, or VEVE's domicile.

richfool wrote:VEVE would have been held IN a tax shelter (in my ISA), so I don't think withholding tax would have applied.

Withholding tax is levied on foreign dividends by foreign governments. UK tax shelters only protect you against further UK taxes.

richfool wrote:VEVE would have been held IN a tax shelter (in my ISA), so I don't think withholding tax would have applied. I was however, not sure if the dividends would be remitted in dollars and then exchanged by my investment manager, thus involving exchange rate spreads etc. However, as I am instead sticking with ATST and JGGI (investment trusts) (held in my ISA) I don't have to worry about either of the above, or VEVE's domicile.

ISAs have no advantage re withholding tax. SIPPs may ( eg with the US ). VEVE pays dividends in USD, and is domiciled in Ireland ( so no direct withholding tax, but VEVE may suffer it on some of its holdings ).

As said, I decided not to purchase VEVE., or any other ETF's, so those issues won't apply.

GeoffF100 wrote:

richfool wrote:VEVE would have been held IN a tax shelter (in my ISA), so I don't think withholding tax would have applied.

Withholding tax is levied on foreign dividends by foreign governments. UK tax shelters only protect you against further UK taxes.

Yes, it is actually quite easy to see that if you look at the stated dividend yield of an ETF that invests in the S&P 500. If the latter yields (say) 2%, then the ETF will yield 1.7%.

In some ways you may be better off holding such an ETF in a taxable account because then, assuming that you have taxable UK dividends, the withheld foreign tax can be offset against your total tax liability.

That said, like the OP, I invest in the US for growth. Given the stated desire for a weighting in technology, I am surprised to see any desire for yield, as the best growers reinvest profits. There are US tech shares that yield a lot, like IBM, Cisco, Intel etc. But they are basically "old tech" and have gone ex-growth.

Lootman wrote:In some ways you may be better off holding such an ETF in a taxable account because then, assuming that you have taxable UK dividends, the withheld foreign tax can be offset against your total tax liability.

You can do that with directly held US shares, but it is news to me if you can do it with an Ireland or Luxembourg domiciled S&P 500 ETF. It may be possible with a US domiciled S&P 500 ETF, but we are not allowed to buy those. VEVE is a developed world tracker, and Vanguard does not tell us how much withholding tax has been deducted. These rules are not at all fair, of course.

GeoffF100 wrote:

Lootman wrote:In some ways you may be better off holding such an ETF in a taxable account because then, assuming that you have taxable UK dividends, the withheld foreign tax can be offset against your total tax liability.

You can do that with directly held US shares, but it is news to me if you can do it with an Ireland or Luxembourg domiciled S&P 500 ETF. It may be possible with a US domiciled S&P 500 ETF, but we are not allowed to buy those. VEVE is a developed world tracker, and Vanguard does not tell us how much withholding tax has been deducted. These rules are not at all fair, of course.

Fair point, I was thinking of my direct US holdings.

You could try computing the ETF withholding tax and claiming it, but I suspect that you'd get slapped down if they noticed.

VHYL, no?

Spet0789 wrote:VHYL, no?

The original thinking had been to target the developed world tracker (VEVE), because it had a low management fee (0.12%), as opposed to VWRL or VHYL, which being "all world" had higher management fees, but because VEVE had a low yield (1.70%), my thinking then progressed, to .... well is there a higher yielding version of the developed world tracker?

In the event, I decided not to tinker, by adding yet another holding and instead stuck with my existing IT's.

GeoffF100 wrote:Here is Monevator's comparison:

https://monevator.com/low-cost-index-trackers/

Market weighted trackers are cheap because they involve almost no trading. Income funds involve more trading and are more expensive. They are less diversified than the market weighted trackers, because the include only higher yielding stocks, and have provided lower total returns over the last decade or so, for what that is worth.

That is wrong on two counts.

All funds have to trade to deal with flows. Look at Portfolio Turnover Ratios to get a proper measure.

Returns from the last three and five years demonstrate the fallacy of your second point as markets return to normal after the distortions of ZIRP and QE.

OhNoNotimAgain wrote:

GeoffF100 wrote:Here is Monevator's comparison:

https://monevator.com/low-cost-index-trackers/

Market weighted trackers are cheap because they involve almost no trading. Income funds involve more trading and are more expensive. They are less diversified than the market weighted trackers, because the include only higher yielding stocks, and have provided lower total returns over the last decade or so, for what that is worth.

That is wrong on two counts.

All funds have to trade to deal with flows. Look at Portfolio Turnover Ratios to get a proper measure.

Returns from the last three and five years demonstrate the fallacy of your second point as markets return to normal after the distortions of ZIRP and QE.

No, all funds do not have to trade. Closed-end funds do not need to worry about flows, only open-ended funds. ETFs don't need to trade either although the market makers may do so to hedge. And an index tracker will not have to trade as much as an active fund that keeps chopping and changing its holdings.

And yes, you can cherry pick a time period where income funds do better than average, just like I can cherry pick time periods when they do not. You cannot dismiss the under-performance of a fund merely by claiming those periods are a "distortion", and similarly claim that periods of out-performance are "normal". That is just playing dishonest games with words.

Lootman wrote:

OhNoNotimAgain wrote:That is wrong on two counts.

All funds have to trade to deal with flows. Look at Portfolio Turnover Ratios to get a proper measure.

Returns from the last three and five years demonstrate the fallacy of your second point as markets return to normal after the distortions of ZIRP and QE.

No, all funds do not have to trade. Closed-end funds do not need to worry about flows, only open-ended funds. ETFs don't need to trade either although the market makers may do so to hedge. And an index tracker will not have to trade as much as an active fund that keeps chopping and changing its holdings.

And yes, you can cherry pick a time period where income funds do better than average, just like I can cherry pick time periods when they do not. You cannot dismiss the under-performance of a fund merely by claiming those periods are a "distortion", and similarly claim that periods of out-performance are "normal". That is just playing dishonest games with words.

You just made a very good case for buying cryptocurrencies if you truly believe ZIRP and QE were not aberrant.

OhNoNotimAgain wrote:

Lootman wrote:No, all funds do not have to trade. Closed-end funds do not need to worry about flows, only open-ended funds. ETFs don't need to trade either although the market makers may do so to hedge. And an index tracker will not have to trade as much as an active fund that keeps chopping and changing its holdings.

And yes, you can cherry pick a time period where income funds do better than average, just like I can cherry pick time periods when they do not. You cannot dismiss the under-performance of a fund merely by claiming those periods are a "distortion", and similarly claim that periods of out-performance are "normal". That is just playing dishonest games with words.

You just made a very good case for buying cryptocurrencies if you truly believe ZIRP and QE were not aberrant.

No, I made a very good case for not trying to time the market.

Central bank interventions are just one of many things an investor should consider. I would never ignore them - as the old Wall Street mantra has it: "Don't fight the Fed".