The Lemon Fool

So, i have a few VWRL (ETF) and also FTSE Global All Cap (fund) in an ISA.

I know that VWRL pays a divi four times a year and that FTSE Global All Cap 'once a year' at calendar year end. (Yes, i appreciate that the fund is an Acc and that the 'divi' is automatically reinvested so that i don't get it as an explicit cash payment to me, whereas VWRL pays out cash each quarter).

Now, the next VWRL ex divi date is 14th March 2024 and i know that if i sell VWRL before then, then i will lose the forthcoming divi already declared; i also know that if i sell VWRL say on 16th March i should receive divi for the number of units sold. If i was to sell before 14th March, then effectively for this calendar year i'll only receive three divi pay outs (summer, autumn, winter) and the spring divi is not received ie effectively lost.

What about the FTSE Global All Cap fund though? What happens to any 'notional divis' if i sell throughout the year? Or is it that the divis are always reinvested as we progress throughout the year so there i don't miss out, as it were?

The reason i ask is that i have some of each in an ISA and am wondering what the pros and cons are of selling the ETF over the fund or vice versa depending on time of year and divi schedule? I'd like to take some money out of the ISA by selling some of one of the holdings.

Is there an optimal strategy to maximise gains?

TIA.

I'm a bit unclear what you are trying to do. Normally the price drops by the divi on ex divi date then is at the mercy of the markets again.

So you could sell before ex divi and get access to you funds almost instantly or sell the day after for less and then collect the divi later on divi pay day. In theory both amounts would be the same.

Surely if you need to sell, kept an eye on the price and sell when it's up.

Rajput1962 wrote:What about the FTSE Global All Cap fund though? What happens to any 'notional divis' if i sell throughout the year? Or is it that the divis are always reinvested as we progress throughout the year so there i don't miss out, as it were?

In an accumulation fund, dividends accrue as the year progresses. If that fund has a single date on which it goes ex-dividend, then on that date the accrued dividends are assimilated into the accumulation fund, while an income fund will fall by the amount of the dividend.

If you sell during the year, you will get the value of the accumulation units, which will include the accrued dividends to that point. If you buy during the year, then your accrued dividend will include "equalisation", which means that all holders get the same amount assimilated into their accumulation units, but some of that is capital which is effectively refunded to you, and reflects the fact that those who buy during the year have not earned all the accumulated dividends, they have paid for them in the price paid.

TJH

The divi on these is circa 2%, which is 0.5% per quarter.

Given these are fluctuating by more than that each day then the biggest difference to your profit will be what happens on sale date.

With the ETF you have control, as the trade is instant, but with the fund you trade at a future price point anyway so luck plays a bigger part than the notional dividend so I wouldn't worry unduly.

Paul

Rajput1962 wrote:Is there an optimal strategy to maximise gains?

No unless there is a reason for you to prefer paying income tax to CGT or vice versa. Selling right before XD date gives you a (slightly) higher capital gain and a (slightly) lower amount of income.

But since you say this is in an ISA it makes no difference. Playing games around XD dates has no net effect since, as others have noted, a fund/share price drops by (on average) the amount of the dividend due. There is no free lunch.