Re: ISHARES PLC FTSE UK DIVIDEND (IUKD)

[mc2fool]

It's a collective fund, so this is the logical place to discuss it, in my view.

All passives are collectives, so by your logic TJH the Passive Investing board should be closed and everything passive discussed here instead! The board descriptions are:

Passive Investing -- Index tracking funds and ETFs
Investment Trusts and Unit Trusts -- Closed-end funds and OEICs

IUKD is an index tracking ETF (even if it is a custom index), and is not an OEIC or closed-ended, so it seems pretty clear to me where discussions of it should go.

[tjh290633]

It's a collective fund, so this is the logical place to discuss it, in my view.

All passives are collectives, so by your logic TJH the Passive Investing board should be closed and everything passive discussed here instead! The board descriptions are:

Passive Investing -- Index tracking funds and ETFs
Investment Trusts and Unit Trusts -- Closed-end funds and OEICs

IUKD is an index tracking ETF (even if it is a custom index), and is not an OEIC or closed-ended, so it seems pretty clear to me where discussions of it should go.

Yes, but it is managed in a way that makes it active, in my view. Or rather the index is managed.

TJH

[mc2fool]

IUKD is an index tracking ETF (even if it is a custom index), and is not an OEIC or closed-ended, so it seems pretty clear to me where discussions of it should go.

Yes, but it is managed in a way that makes it active, in my view. Or rather the index is managed.

No, not in the slightest, TJH. It is not "managed" at all, there is no manager or active decision maker. The constituents and their weights are decided entirely by formula, just as is the FTSE 100, 250, etc, as opposed to by people. That's what passive vs active means.

[richfool]

IUKD is an index tracking ETF (even if it is a custom index), and is not an OEIC or closed-ended, so it seems pretty clear to me where discussions of it should go.

Yes, but it is managed in a way that makes it active, in my view. Or rather the index is managed.

No, not in the slightest, TJH. It is not "managed" at all, there is no manager or active decision maker. The constituents and their weights are decided entirely by formula, just as is the FTSE 100, 250, etc, as opposed to by people. That's what passive vs active means.

The OP was about IUKD, which according to HL is an ETF. ...See link below...... Thus I still fail to see why it is on this board.

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

The OP for the record:

Has anyone got views on the iShares dividend ETF, IUKD? In a nutshell it pays dividends by holding the top 50 high yielding stocks in the FTSE 350. So on average a complete Carrillion style wipe out would only hit the ETF value by around 2%. The stocks it holds will naturally rotate if companies either cut or stop dividends or if their shares increase such that the yield is no longer in the highest 50. It looks on the face of it like a very hands off buy and forget annuity like income stream. I note capital performance is pretty poor, but that's of secondary importance in this kind of investment.

What's the audience view on IUKD?

Details at HL website - https://www.hl.co.uk/shares/shares-sear ... -ucits-etf

Thanks

RVF

[Itsallaguess]

The OP was about IUKD, which according to HL is an ETF.

Thus I still fail to see why it is on this board.

Someone has already suggested what seems like a good reason in an earlier post, and I see that you've not directly replied to the point being made -

A fascinating discussion, but shouldn't it be on the "Passives Board", or failing that on the "Investment Strategies board". It doesn't really seem to be about Investment Trusts or Unit Trusts.

ITs and Unit Trusts have been suggested as alternatives to this ETF - and I don't suppose they could be mentioned on the passives board.

https://www.lemonfool.co.uk/viewtopic.php?f=54&t=20000&start=20#p259106

It should also be noted that the OP did phrase his original question in a way that seems to suggest that he might be well aware that it's an ETF, but that he's asking here on the IT and Unit Trust board for a good reason -

What's the audience view on IUKD?

https://www.lemonfool.co.uk/viewtopic.php?f=54&t=20000

So as scotia has suggested above, if the OP wanted to garner a wide-range of opinions, perhaps crossing the line between ETF's, Investment Trusts, and Units Trusts, then to do that easily with one thread on either this board or the ETF board would have proved difficult, even with a cross-post being used, as by your reckoning there would then perhaps have to be a 'split discussion', with one thread discussing alternative ETF's on the ETF board, and one thread perhaps discussing alternatives in the IT/Unit Trust universe on this one. That doesn't seem to be the most efficient method of discussion, and might well be likely to cause unnecessary confusion if it was even attempted...

I think sometimes it just pays to be a bit pragmatic with these things, and maybe allow a bit of leeway where posters are perhaps trying to cross two board-boundaries at once with a single useful post, to garner opinions from a number of different groups of people on broadly the same sub-topic.

Cheers,

Itsallaguess

[Lootman]

IUKD is an index tracking ETF (even if it is a custom index), and is not an OEIC or closed-ended, so it seems pretty clear to me where discussions of it should go.

Yes, but it is managed in a way that makes it active, in my view. Or rather the index is managed.

No, not in the slightest, TJH. It is not "managed" at all, there is no manager or active decision maker. The constituents and their weights are decided entirely by formula, just as is the FTSE 100, 250, etc, as opposed to by people. That's what passive vs active means.

I think TJH is trying to make a distinction between cap-weighted passive funds, and the so-called "smart beta" passive funds where the set of rules that drive the fund is something other than the normal cap-weighted rules, and so appears to be more "active".

I think that is a distinction that is worth making, but I don't think that it means that "smart beta" funds should be lumped in with discussions of OEICs and investment trusts. After all, cap-weighted may be the norm but it is just another set of rules, just like custom indexes are. It's really the active versus passive distinction that is the most important, as you say. Passive funds are rules-based and active funds are manager-based.

Passive funds don't need managers in the same sense of the word as active funds do. In practice there will be a human managing a passive fund. He/she just doesn't make investment decisions as we know it. He will have to manage things like corporate actions, index promotions and relegations, proxy voting, fund inflows/outflows and various administrative tasks to do with reporting, compliance etc. For a passive fund that is not cap-weighted, periodic rebalancing is typically more challenging. And if the underlying set of rules is tweaked, which happens, then that needs to be dealt with as well.

That still leaves the question of where a topic should go that seeks to compare an active fund with a passive fund. Say, compare an IT with an ETF that invests in the same pool. But I will leave that for someone else to answer.

[richfool]

TJH, I didn't respond to Scotia's point, as I hadn't wanted to start an argument or appear pedantic. However, I did actually report the original post as being more appropriate to the Passives Board or if there was an intention to compare IUKD with other stocks, funds or trusts, then perhaps (more appropriate) to the Investment Strategies board. I also subsequently posted on the thread:

A fascinating discussion, but shouldn't it be on the "Passives Board", or failing that on the "Investment Strategies board". It doesn't really seem to be about Investment Trusts or Unit Trusts.

The OP only ever mentioned ETF IUKD in his OP, and as far as I can see the subsequent discussion has been about ETF IUKD., apart from a couple of brief comparisons to IT CTY. Therefore I can see no reason why it should have been on the IT & UT board. The main point was an etf. Even if the topic embraced comparisons to other stocks or funds, the etf was still the main subject and anything else was surely subordinate to it and thus the "anything else" should not be the determining factor in what board to post it on, particularly as they hadn't yet been referred to in the OP.

The reason I have raised the matter, is that I am interested in IT's and I predominantly look at that board and the posts on it. I am however not interested in passives.

[colin]

Couple of years ago I stumbled on a fundsft.com page for IUKD . Several of the top 10 portfolio holdings had been cross referenced as having Investors Chronicle buy ratings.

[OhNoNotimAgain]

It's a collective fund, so this is the logical place to discuss it, in my view.

All passives are collectives, so by your logic TJH the Passive Investing board should be closed and everything passive discussed here instead! The board descriptions are:

Passive Investing -- Index tracking funds and ETFs
Investment Trusts and Unit Trusts -- Closed-end funds and OEICs

IUKD is an index tracking ETF (even if it is a custom index), and is not an OEIC or closed-ended, so it seems pretty clear to me where discussions of it should go.

Yes, but it is managed in a way that makes it active, in my view. Or rather the index is managed.

TJH

I believe there are now several thousand indices and I suspect the way they are managed varies a lot.
The Dow Jones is one of the most subjective but others are much more formulaic with very little scope for subjectivity.
How closely a fund follows an index is subjective. It is simply not worth the cost of trading to follow every small sum of money that flows into and out of a fund to precisely track an index. This is especially the case if, say, an impending corporate action will generate an inflow of cash in a weeks' time but you have a small redemption to deal with.
A simple way to check is look at the tracking error and the portfolio turnover ratio.
I guess if you divided one by the other you would get a fairly good measure of the efficiency of the manager.

[Arborbridge]

Couple of years ago I stumbled on a fundsft.com page for IUKD . Several of the top 10 portfolio holdings had been cross referenced as having Investors Chronicle buy ratings.

Did you mean: https://markets.ft.com/data/funds/uk
which I found from: funds.ft.com

Arb.

[colin]

Couple of years ago I stumbled on a fundsft.com page for IUKD . Several of the top 10 portfolio holdings had been cross referenced as having Investors Chronicle buy ratings.

Did you mean: https://markets.ft.com/data/funds/uk
which I found from: funds.ft.com

Arb.

Yes that was the site, but I see that today there are no such entries against the top 10.
It may be of interest to point out that there is an article in this weeks Investors Chronicle concerning dividend payouts from FTSE100 companies which looks into the matter of whether they are sustainable. I have not read the whole article but the gist of it seemed to be that the high yields from the top 10 in that index had been boosted by special dividend payouts not likely to be repeated, but anyone one interested in the question of whether dividend payouts from IUKD are sustainable should read the article.

Actually just had another look at the site and Investors Chronicle's recommendations on the top 10 holdings are still recorded but only Legal and General and Aviva currently have buy recommendations.

[tjh290633]

Just thought I'd reflect a bit on this "oven ready high yield portfolio in a box" fund. The capital value has been quite badly hit with the recent market turbulence. The page on IUKD at Hargreaves Lansdown states a >7% yield on this. Looking at the top ten holdings, IUKD can't havea hope of paying anything like that yield. A bear trap primed to catch the unwary or uninformed? Not really what one thinks when looking at a passive invstment fund.

Shouldn't this kind of stuff be coming with a serious financial health warning these days?

RVF

The same goes for any forecast based on historical dividends where the company has not made any predictions or updates since the crisis began.

I understand that H-L work on the last full financial year for the company. I would do my own research.

TJH

[Alaric]

The same goes for any forecast based on historical dividends where the company has not made any predictions or updates since the crisis began.

It's now only Investment Trusts where any continuity of the dividend can reasonably be assumed. Most ITs have said that they intend to attempt to maintain their dividends. ETFs will follow the market as will OEICs unless they get creative. REITs may have to make a distribution to maintain their special status, but there seems a fair amount of wriggle room based on their announcements so far.

[tjh290633]

Moderator Message:
Split off from this thread to keep it on-topic. - Chris

Blackrock do a high yield ETF (IUKD) that's full of the usual HYP candidates and has a current trailing yield of 5.8%

When that was first set up in 2005 it was a total disaster. Very highly weighted in financials, and it started at about £10 and fell to about £5 in 2008-9. I kept track of it for 10 years or so, and it got back to £10 briefly in 2015.

Blackrock changed the modus operandi when they took it over, including quarterly instead of annual rebalancing, and limiting the number of constituent changes, as I recall.

An HYP clone it was most definitely not.

TJH