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Keith Thomas
Posted: 07 December 2024 10:51:09(UTC)
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Joined: 22/12/2011(UTC)
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HI
Is there any mileage in flipping a fund just after it has gone ex-dividend, into another fund of similar performance with an ex-dividend date a month later? When that fund has gone ex-dividend, flip back to the original fund?
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OmegaMale
Posted: 07 December 2024 11:58:39(UTC)
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Keith Thomas;328006 wrote:
HI
Is there any mileage in flipping a fund just after it has gone ex-dividend, into another fund of similar performance with an ex-dividend date a month later? When that fund has gone ex-dividend, flip back to the original fund?


Pretty sure that the answer is "No". I believe that the equalisation payment that arrives along with any dividend payment effectively covers that.

You can get a slight gain by closing savings accounts and getting the accrued interest early, and then reopening but it really isn't worth it.

OM
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2 users thanked OmegaMale for this post.
Keith Thomas on 07/12/2024(UTC), MarkSp on 15/12/2024(UTC)
MarkSp
Posted: 15 December 2024 10:17:49(UTC)
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OmegaMale;328014 wrote:
Keith Thomas;328006 wrote:
HI
Is there any mileage in flipping a fund just after it has gone ex-dividend, into another fund of similar performance with an ex-dividend date a month later? When that fund has gone ex-dividend, flip back to the original fund?


Pretty sure that the answer is "No". I believe that the equalisation payment that arrives along with any dividend payment effectively covers that.

You can get a slight gain by closing savings accounts and getting the accrued interest early, and then reopening but it really isn't worth it.

OM


You can play that game with things like LGEN
Sell the week of XD, wait and then buy back in before the payment date.
My experience is that the SP drop>Divi payment. I have been doing this with LGEN AViva and MNG
MNG recovers the drop quickest, LGEN is the slowest...............Aviva is the riskiest as it is least like a bond proxy

I may work with JHYP a bond ETF......the SP drop > Divi but it recovers the drop very quickly.
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Sheerman on 15/12/2024(UTC), Keith Thomas on 03/01/2025(UTC)
Johan De Silva
Posted: 15 December 2024 10:35:30(UTC)
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The spread and stamp duty would make this pointless.

Many funds pay out a dividend from selling stocks rather than natural income.

The only fund strategy is discount trading... for example PCT is trading at over a 12% discount. ATT at 11% discount. All the while JGGI and then JAM and then JASC closed their discounts but at the end of the day they own similar drivers of performance. I did well with those. Going to likely do well with ATT, PCT, PCFT, BASC, PSH...etc all the way to alternatives like PINT and HVPE.

Its certainty not hard. It may take more than 1-year (otherwise the market would copy it), if you stay roughly cap weighted to the drivers of outperformance you can outperform the world index (maybe not every year, but most) and with a lot of effort the S&P500. Tech and finance could continue to do well into 2025.
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Sara G on 15/12/2024(UTC), Sheerman on 15/12/2024(UTC), Keith Thomas on 03/01/2025(UTC)
John Bleke
Posted: 15 December 2024 10:40:24(UTC)
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No arbitrage is possible else the big boys would be all over it surely. In theory the share price should always additionally reflect any cum divs rights whether it be 1 week or 51 weeks, gradually rising to the day before ex div date. Happy to know if this is not borne out in practice but I doubt it.
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4 users thanked John Bleke for this post.
Sara G on 15/12/2024(UTC), Thrugelmir on 15/12/2024(UTC), Guest on 15/12/2024(UTC), ben ski on 15/12/2024(UTC)
Robert D
Posted: 15 December 2024 11:48:51(UTC)
#4

Joined: 06/11/2016(UTC)
Posts: 1,467
MarkSp;328637 wrote:


You can play that game with things like LGEN
Sell the week of XD, wait and then buy back in before the payment date.
My experience is that the SP drop>Divi payment. I have been doing this with LGEN AViva and MNG
MNG recovers the drop quickest, LGEN is the slowest...............Aviva is the riskiest as it is least like a bond proxy
YP a bond ETF......the SP drop > Divi but it recovers the drop very quickly.



Does the share price drop make it worthwhile, after selling and buying costs?

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Sara G
Posted: 15 December 2024 11:58:37(UTC)
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Life's too short, and the amounts you'd need to deploy too large (and therefore too risky) to make it worthwhile IMO. I sometimes top up if something falls on ex-div day, but I'm not sure it makes much difference over the long term.
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4 users thanked Sara G for this post.
Johan De Silva on 15/12/2024(UTC), Micawber on 15/12/2024(UTC), Guest on 15/12/2024(UTC), Keith Thomas on 03/01/2025(UTC)
MarkSp
Posted: 15 December 2024 14:51:32(UTC)
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Robert D;328643 wrote:
MarkSp;328637 wrote:


You can play that game with things like LGEN
Sell the week of XD, wait and then buy back in before the payment date.
My experience is that the SP drop>Divi payment. I have been doing this with LGEN AViva and MNG
MNG recovers the drop quickest, LGEN is the slowest...............Aviva is the riskiest as it is least like a bond proxy
YP a bond ETF......the SP drop > Divi but it recovers the drop very quickly.



Does the share price drop make it worthwhile, after selling and buying costs?



LGEN was but, you do need to take a decent position as Sara notes below and, you may not want to hold that sort of position size in a single stock.
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Sara G on 16/12/2024(UTC)
ben ski
Posted: 16 December 2024 00:02:38(UTC)
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Joined: 15/01/2016(UTC)
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Keith Thomas;328006 wrote:
HI
Is there any mileage in flipping a fund just after it has gone ex-dividend, into another fund of similar performance with an ex-dividend date a month later? When that fund has gone ex-dividend, flip back to the original fund?


No.

On the ex-div date, the amount that's going to be paid out is simply subtracted from the share price. It's one of the easiest calculations the market does. A dividend isn't an additional return – it's simply your own investment being liquidated back to you. ('free dividends fallacy')

There's other market noise on top of that subtraction. So it's not like the ex-div day cancels out everything else that happens in markets to affect share prices. It's possible with something like LGEN that enough equity income funds need to hold it FOR the dividend (so they can legally stay in the equity income sector), so it gets sold off on ex-div dates, because they'd rather hold something else. But there shouldn't be an arbitrage opportunity there unless you can consistently front-run the selling and buying – which their desk traders would be trying to do if they notice they're losing money on those days.
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4 users thanked ben ski for this post.
Sara G on 16/12/2024(UTC), Guest on 16/12/2024(UTC), Sheerman on 16/12/2024(UTC), Keith Thomas on 03/01/2025(UTC)
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