Qd on ETFs

[EV Pad]

May I ask if ETFs are a basket of stocks and follow the index, then it’s dividend is harvested from the dividends of the stocks inside the basket?

 

[reddevil0728]

May I ask if ETFs are a basket of stocks and follow the index, then it’s dividend is harvested from the dividends of the stocks inside the basket?

Not all ETFs follow the index

got some are active.

yes

 

[BBCWatcher]

May I ask if ETFs are a basket of stocks and follow the index, then it’s dividend is harvested from the dividends of the stocks inside the basket?

That's correct.

 

[reddevil0728]

That's correct.

There are active ETFs that doesn’t track index

 

[BBCWatcher]

There are active ETFs that doesn’t track index

Sure, but EV Pad didn't ask about those. But if EV Pad had asked about actively managed ETFs the answer would be the same.

Likewise, many funds that hold dividend paying stocks are not exchange-traded. Same answer: they still receive dividends from the underlying stocks they hold, and if the fund distributes dividends then that's where they (first) come from.

It's mathematically possible for funds (if legal) to distribute more dividends than the underlying net dividends received from the stocks they hold. They can generate their higher dividend payouts by selling shares. Obviously that approach would reduce the value of shares held by the fund, so its share price would fall, other things being equal. And of course fund managers collect their fees at some point, so higher fees reduce dividends/dividend reinvestment more than lower fees do.

 

[reddevil0728]

Sure, but EV Pad didn't ask about those. But if EV Pad had asked about actively managed ETFs the answer would be the same.

Likewise, many funds that hold dividend paying stocks are not exchange-traded. Same answer: they still receive dividends from the underlying stocks they hold, and if the fund distributes dividends then that's where they (first) come from.

It's mathematically possible for funds (if legal) to distribute more dividends than the underlying net dividends received from the stocks they hold. They can generate their higher dividend payouts by selling shares. Obviously that approach would reduce the value of shares held by the fund, so its share price would fall, other things being equal. And of course fund managers collect their fees at some point, so higher fees reduce dividends/dividend reinvestment more than lower fees do.

this is the liner i was referring to.

not entirely accurate, i thought you would have picked it up cause of accuracy and precision

May I ask if ETFs are a basket of stocks and follow the index,

 

[BBCWatcher]

I read EV Pad's question as incorporating his/her predicate, not as an assertion that all ETFs are stock index ETFs. But if EV Pad wants to clarify, great.

 

[sohguanh]

May I ask if ETFs are a basket of stocks and follow the index, then it’s dividend is harvested from the dividends of the stocks inside the basket?

Logical correct? Else the dividends come from where? But if it is US exchanges listed stocks etfs dividends tax 15% sibei siong. So US stocks etf go for capital gain more better. Or like other readers go hunt other country stock exchanges to buy.