STI ETF vs Nikko AM STI ETF

from the half year report, it seems that STI ETF was paying out more than the dividend it received as dividend, but Nikko AM STI ETF was paying much less the dividend it received.

Anyone knows why? Though the manager has absolute discretion for distributed as stated in both ETFs, any particular reason? and why Nikko AM ETF is not trading higher than STI ETF since it retains some dividend?

STI ETF Nikko AM STI ETF
dividend received: 5,880,149 3,223,761
expense: 561,550 314,445
dividend to be paid: 5.5 cents 3 cents
units in issue: 127,000,000 51,946,400

using 31 May 2012 NAV, Nikko is 2.8194 while STI ETF is 2.831483

http://www.nikkoam.com.sg/nikko-am-singa...undprofile
http://www.spdrs.com.sg/etf/fund/excel/f...y_STTF.csv

Difference might be due to tracking error, cash holding and slight variation in holding. expense is pretty similar ar around 0.30%.

I think STI ETF has a longer history & much bigger AUM (asset under management). Nikko AM was DBS's version of STI ETF which was launched not too long ago.

In terms of expense ratio, STI ETF is likely lower (as a % of total dividend received from the component stocks).

Nikko AM thus has the problem of a small fund. Much of the gain (dividend received) goes to the managers' pockets.

(04-06-2012, 05:14 PM)Mr Nobody Wrote: I think STI ETF has a longer history & much bigger AUM (asset under management). Nikko AM was DBS's version of STI ETF which was launched not too long ago.

In terms of expense ratio, STI ETF is likely lower (as a % of total dividend received from the component stocks).

Nikko AM thus has the problem of a small fund. Much of the gain (dividend received) goes to the managers' pockets.

not like that, at least not reflected in the income statement.

yes, Nikko AM's expense ratio is higher, but just a bit higher only.

the main question is why Nikko AM chooses to distribute so little, but not perform better.

I think STI ETF is much better and has been around for very long, so likely to stay

http://www.spdrs.com.sg/etf/fund/fund_detail_STTF.html#

Nikko AM, I scared if they cannot grow any bigger, hard for them to make $$
if they cannot survive then close down, more ma fan also

when buying ETF, to me the bigger the better as they can lower cost, example vanguard etfs

(04-06-2012, 03:58 PM)freedom Wrote: from the half year report, it seems that STI ETF was paying out more than the dividend it received as dividend, but Nikko AM STI ETF was paying much less the dividend it received.

Anyone knows why? Though the manager has absolute discretion for distributed as stated in both ETFs, any particular reason? and why Nikko AM ETF is not trading higher than STI ETF since it retains some dividend?

STI ETF Nikko AM STI ETF
dividend received: 5,880,149 3,223,761
expense: 561,550 314,445
dividend to be paid: 5.5 cents 3 cents
units in issue: 127,000,000 51,946,400

It's usually a trade-off for an ETF fund manager to pay out cash dividend. As management fee is typically charged on a fixed percentage basis, paying out dividend brings down the fund size, thus a reduced revenue. On the other side, a regular and consistent dividend payment could potentially bring in more investors with an increased fund size.

while fund price is determined by its nav, calculated as market cap/total number of units. it is not necessary for fund price to track the index level. instead, its return tracks.

that seriously make the nikko one look inferior, plus both have tracking errors.

really wish Vanguard brings their Total World Stock Market ETF over here.

(25-08-2013, 10:04 AM)quantcall Wrote:

(04-06-2012, 03:58 PM)freedom Wrote: from the half year report, it seems that STI ETF was paying out more than the dividend it received as dividend, but Nikko AM STI ETF was paying much less the dividend it received.

Anyone knows why? Though the manager has absolute discretion for distributed as stated in both ETFs, any particular reason? and why Nikko AM ETF is not trading higher than STI ETF since it retains some dividend?

STI ETF Nikko AM STI ETF
dividend received: 5,880,149 3,223,761
expense: 561,550 314,445
dividend to be paid: 5.5 cents 3 cents
units in issue: 127,000,000 51,946,400

It's usually a trade-off for an ETF fund manager to pay out cash dividend. As management fee is typically charged on a fixed percentage basis, paying out dividend brings down the fund size, thus a reduced revenue. On the other side, a regular and consistent dividend payment could potentially bring in more investors with an increased fund size.

while fund price is determined by its nav, calculated as market cap/total number of units. it is not necessary for fund price to track the index level. instead, its return tracks.

I don't think what you said applies to index tracking ETF such as the above 2 ETFs. As the 2 ETFs units can be created by depositing the underlying shares. If ETF's NAV is higher than the underlying shares, other investors might deposit their underlying shares and receive ETF units then sell the ETF units at NAV in the open market, which will receive higher price.

Thus, there is no point for ETF fund managers（at least the above 2) to retain dividends to increase NAV.

(25-08-2013, 10:12 AM)freedom Wrote:

(25-08-2013, 10:04 AM)quantcall Wrote:

(04-06-2012, 03:58 PM)freedom Wrote: from the half year report, it seems that STI ETF was paying out more than the dividend it received as dividend, but Nikko AM STI ETF was paying much less the dividend it received.

Anyone knows why? Though the manager has absolute discretion for distributed as stated in both ETFs, any particular reason? and why Nikko AM ETF is not trading higher than STI ETF since it retains some dividend?

STI ETF Nikko AM STI ETF
dividend received: 5,880,149 3,223,761
expense: 561,550 314,445
dividend to be paid: 5.5 cents 3 cents
units in issue: 127,000,000 51,946,400

It's usually a trade-off for an ETF fund manager to pay out cash dividend. As management fee is typically charged on a fixed percentage basis, paying out dividend brings down the fund size, thus a reduced revenue. On the other side, a regular and consistent dividend payment could potentially bring in more investors with an increased fund size.

while fund price is determined by its nav, calculated as market cap/total number of units. it is not necessary for fund price to track the index level. instead, its return tracks.

I don't think what you said applies to index tracking ETF such as the above 2 ETFs. As the 2 ETFs units can be created by depositing the underlying shares. If ETF's NAV is higher than the underlying shares, other investors might deposit their underlying shares and receive ETF units then sell the ETF units at NAV in the open market, which will receive higher price.

Thus, there is no point for ETF fund managers（at least the above 2) to retain dividends to increase NAV.

if i understand you correctly, you are talking about nav per unit vs trading price of etf. yes, these two have to match or stay close enough, to prevent arbitrage.

ETF can also have split and reverse split, imaging spdr etf now has a 10 for 1 split, its price will drop to 1-tenth of the current price, but this is perfectly ok, because it's nav per unit also dropped.

for 2nd line, whatever etf pays out will reduce the fund revenue, so sgx set a rule that the etf pay dividend at least once a year.

(25-08-2013, 10:21 AM)quantcall Wrote:

(25-08-2013, 10:12 AM)freedom Wrote: I don't think what you said applies to index tracking ETF such as the above 2 ETFs. As the 2 ETFs units can be created by depositing the underlying shares. If ETF's NAV is higher than the underlying shares, other investors might deposit their underlying shares and receive ETF units then sell the ETF units at NAV in the open market, which will receive higher price.

Thus, there is no point for ETF fund managers（at least the above 2) to retain dividends to increase NAV.

if i understand you correctly, you are talking about nav per unit vs trading price of etf. yes, these two have to match or stay close enough, to prevent arbitrage.

ETF can also have split and reverse split, imaging spdr etf now has a 10 for 1 split, its price will drop to 1-tenth of the current price, but this is perfectly ok, because it's nav per unit also dropped.

for 2nd line, whatever etf pays out will reduce the fund revenue, so sgx set a rule that the etf pay dividend at least once a year.

You don't understand what I am saying.

The NAV and the unit price should be very close, that's right. But, the unit price of the ETF should also track the price of its underlying shares. Otherwise, there is another kind of arbitrage. The ETF units can be created by depositing underlying shares and be redeemed by exchanging the ETF units into underling shares.

If the price of the units is too distant(higher) from the price of underlying shares, investors can create the ETF units by depositing the underlying shares and sell the ETF units in the open market. if the price of the units is lower than the price of underlying shares, investors will redeem ETF units and receive the underlying shares and sell the underlying shares in the open market.

Thus, the unit price = the NAV of the ETF = the price of underlying shares.

Retaining dividends/cash is quite irrational.