Total Return vs FTSE

[Johny01]

Hi

The following table astounded me showing the difference dividends make to the total return- source http://www.swanlowpark.co.uk/ftseannual.jsp

I assume the total return includes reinvested dividends in the year. It explains why I regularly beat the index with my HYP but also shows that I am not an investment wizard.

One question I have is what do trackers do with the dividends as it is not very clever just to track an index?

Cheers John


Year FTSE-100 Index FTSE-All-Share Index
Index % Total Index % Total
Change Return Change Return
2017 7688 7.6 12.0 4222 9.0 13.10
2016 7143 14.4 19.1 3873 12.5 16.75
2015 6242 -4.9 -1.3 3444 -2.5 0.98
2014 6566 -2.7 0.7 3533 -2.1 1.18
2013 6749 14.4 18.7 3610 16.7 20.81

[JohnB]

INC trackers pay out the dividends after deducting their management fee.
ACC trackers keep reinvesting it automatically, deducting their fee as they go.

ACC is less work when inside a pension or ISA when there is no tax to pay.
INC is easier when you need to pay tax on those dividends, as the amount is clear. You are still liable to pay tax on ACC dividends, but finding out how much can be hard.

INC is easier for capital gains, but gets horribly complicated if you start reinvesting in the same fund.
ACC is a nightmare for capital gains

Total return is all that matters, and comparing indexes with inflation severely underestimates their value.