Mutual Fund dividend question

Ato · 29 July 2009

Hi

I am doing some study now on stocks & mutual funds. I'm thinking mutual funds will be a place to put some money to begin. I'd like to be able to pick the funds I want to invest in too, rather than use a financial planner. Anyway, that's what I'm studying about at the moment, and I have a question that I cant seem to find an answer for.

How do mutual funds and dividends usually work, and where can I find the dividend information listed? I think that I want funds that pay dividends because otherwise I'd be speculating rather than investing (although I admit I still have some reading to do on this; any advice is appreciated). I am using MorningStar for my research and I cant seem to find where the dividend information is listed.

Thanks in advance

Ato · 30 July 2009

Hmm 25 (online) views, and no reply? Am I missing something more fundamental...?

Krusty the Klown · 30 July 2009

Where you look for the information depends also on the structure of the fund.

If the fund is a LIC, then look for the financial reports. If the fund is a trust, which most funds offered by platforms and advisers are, then look for a distribution amount, not a dividend.

The income distribution of a managed trust, consists of distributed capital gains as well as dividend income.

Ato · 30 July 2009

Cheers Krusty.

So, let's take this one as an example:
http://www.morningstar.com.au/Funds/FundReport/11639
It says under the heading Fund Details down the bottom that it has cash distributions annually, which is what I guess you were referring to. Where does it say there, how much those payments are?

awg · 30 July 2009

To the best of my knowledge, the detailed information you require can be accessed in the following manner:

enter the title of the managed fund or provider into google

go to the website of the provider.

the details will be listed there

you will find each fund has a specific APIR code eg UBS0003AU

entering that into google will take you straight to the info.

the details may be somewhat obscure, but they are there

Ato · 30 July 2009

Sorry, I dont understand.

I tried googling the example fund in the link in my post above, but nothing particularly useful comes up that isnt already on MorningStar. Would it be too much to ask if you could walk me through an example?

awg · 30 July 2009

example:

ubs0003au

http://www.avivagroup.com.au/files/documents/fdd/UBS0003AU.pdf

also check the UBS site

what you will find, is the funds make distributions

not dividends

that is one reason, apart from fees and liquidity, why I, and probably most others on this site, invest in direct shares

or lic/etf shares for index stye coverages.

sorry cant help more, gotta go now

Krusty the Klown · 30 July 2009

I had a quick look at Morningstar, they are only showing total return ie capital growth + income, not distributions.

You may have to go to the individual fund manager's site to see that. I don't like your chances of finding exact distribution % however, usually, it is measured as I mentioned above and can change dramatically each distribution.

It is hard for a fund manager to predict or project what distributions will be as income received by the fund is at the whim of the directors of the companies they invest in. So if you have 40-50 companies invested in, you will get annual variation in profitability and dividend payouts. Hard for a fund manager to say we will target a 5% distribution yield with this in mind.

Perhaps a phone call or email to the fund manager may get the info you need, they'd be only too helpful to encourage you to invest with them!!!

Ato · 30 July 2009

Very kind of you both. I think I kind of understand now. Guess the whole distribution thing is a bit different from dividends then.

I was looking at shares, but realised I dont have enough knowledge to invest and make money, nor time & money to spend doing it. I'd almost certainly lose. So I figured mutual funds that I do my own research on (rather than use a FP to cut costs), would be the best bet for my buck. Even if they dont make much, hopefully they can follow the index largely and thereby I wont have my value eaten away by inflation.

Krusty the Klown · 30 July 2009

Ato said:
Very kind of you both. I think I kind of understand now. Guess the whole distribution thing is a bit different from dividends then./QUOTE]

Distributions are very different from dividends, as I mentioned above, in a trust structure when a fund manager sells a parcel of shares they can distribute some of the capital gains in the distribution as well.

I was looking at shares, but realised I dont have enough knowledge to invest and make money, nor time & money to spend doing it. I'd almost certainly lose. So I figured mutual funds that I do my own research on (rather than use a FP to cut costs), would be the best bet for my buck. Even if they dont make much, hopefully they can follow the index largely and thereby I wont have my value eaten away by inflation.

Click to expand...

You still can look at shares, look for LIC's and ETF's. These are Listed Invesment Companies and Exchange Traded Funds. They are exactly the same as a mutual fund except you buy and sell the units on exchanges as opposed to buying units via a third party.

AFIC and ARGO are both well known Australian LIC's, it might pay to look them up, they are a lot cheaper in management cost than usual managed funds.

Ato · 30 July 2009

Goodo. Cheers again. I'll take a look at those things too

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