WisdomTree Trust Declares Distributions for ETFs
In case you were curious.
There was a little confusion about some of the earlier dividends but I stumbled across an easy-ish explanation.
An issue arose when the dividends were smaller than expected, a few months ago. This answer has to do with the growth in assets of the fund.
The example I read (in the ETFReport) went something like this; if the fund owned 1000 shares of Exxon Mobil when XOM went ex-dividend but owned 2000 shares when the dividend paid the fund would have to pay the dividend for the 1000 shares out to 2000 shares now held.
The fund was only entitled to a dividend 1000 shares but growth took the position to 2000 shares.
Put another way if on September 1 the total assets of the fund were $100,000 and every stock went ex-div on that day the fund might take in $1000. If WisdomTree then went ex-dividend on October 1st but by then the assets had grown to $200,000 it would have to pay that $1000 out to all $200,000 in assets.
Maybe it's not that easy.
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13 comments:
Thank you, I was just trying to forecast distributions and didn't have a clue when they would come. Now I know I won't have a clue how much they'll be since they won't match the index yield. So are the dividends distributed once a year, or quarterly?
This problem of getting dividends based on fewer shares than currently outstanding will not be good for shareholders expecting the index yield minus expenses. Why didn't they indicate this would be the case on their web pages? Seems like poor planning and communication.
dividends are quarterly. I eyeballed a couple and they seemed much closer right, but i did not take out the calculator.
I know that technically they did the right thing with how this was disclosed (but I have not looked for it) but I do no think they did what they could to exceed expactations on managing the issue.
Thank you for the info. I own DGG and DEW and given the stated dividend for these two and multipying this amount times four the yields would be just over 2 percent. So either the amounts need to be MUCH more in the future or the frequency (although monthly would be too much) or something to meet the index yields minus expenses.
Although I did not buy them for yield alone a company, like WisdomTree that promotes yield as a selection critieria should be more careful disclosing how and when that yield will or will not appear for shareholders. If they have it in the prospectus alone (which I will go back and read) I missed it and mea culpa. But that would not be what I would call great communication anyway given their emphasis. I hope they'll learn quickly because the research does indicate yield can be predictive of performance. As you know.
I hold both Wisdom Tree And ishares ETF's and it looks like they both went ex-dividend today with the same pay day being the 28th.
As a side note, WSDT is up .65 today (8.76%).
I knew I should have bought this stock when I statred tracking it at $4.00. I still like it at below $8.00. I will put in my limit order now.
what the hell happened to EUROX today? down 13% in one day ??
Eurox is ex-div today
Is there a Pan-european defense sector ETF or CEF? I'm gettimg more wary (weary?) as I keep hearing such wonderful forcasts for 2007. Tom in Indy
There is no European defense ETF trading in the states. If there is one trading in Europe, i don't know about it.
Great letter back from Wisdom tree on yield problem! Long...
Sharon,
Distributions for international funds occur on an annual basis. Because
those funds have an inception date of June 16th, the dividend is about
half of what it normally would have been. Also, this year's dividend
distributions were impacted by three factors that affected the amount of
dividends paid and contributed to differences between the Fund dividend
yields and the corresponding Index dividend yields. These factors are:
-Timing of Dividend Payments
-Growth in Assets
-Fund Expenses
Timing of Dividend Payments:
The Funds paid out as dividend distributions the dividends that they
actually received from companies included in their respective portfolios
for the period from inception on June 16 to the end of the period. One
factor that contributed to differences between Fund yields and index
yields was simply the timing of when securities held by the Funds paid
dividends and differences between the way the Funds and indexes treat
such payments. Some companies held by the Funds and included in the
indexes declared dividends during the period, but did not actually pay
them until after the end of the period. Because the Funds did not
actually receive the dividend payment during this time these amounts are
not reflected in the Fund dividend yields for this year (they will be
reflected next year). Because of this and other differences in the way
the indexes and Funds treat dividends paid on portfolio securities,
there may be differences between index dividend yields and Fund dividend
yields. WisdomTree expects these differences to smooth out over longer
periods of time. In addition, the index dividend yields displayed on
wisdomtree.com are gross dividend yields based on dividends that index
component companies have paid over the trailing twelve months. This is a
different time frame from the interval between June 16 and November 30
during which the Funds collected and paid out dividends.
Growth in Fund Assets:
A significant increase in assets during a quarter can reduce the per
share amount of dividends paid by a mutual fund or ETF. This happens
because as assets grow more shares of a fund or ETF are issued to meet
demand. Dividends on portfolio securities received on a smaller asset
base earlier in a quarter are "spread out" over a larger shareholder
base at the end of a quarter. Because new investors buy shares at net
asset value, which includes all accrued dividends on portfolio
securities, the value of an investment in a fund is not diluted as a
result of asset growth throughout a quarter. However, because the cash
received from dividends on portfolio securities at the beginning of a
quarter may be spread out among a higher asset base, asset growth may
cause the per share cash dividend to be lower for that quarter. Certain
WisdomTree Funds saw large percentage increases in assets during the
quarter and were affected by the timing of payments over the period
because of it. Typically, funds and ETFs do not experience this kind of
asset growth in percentage terms during one quarter. This issue is more
prevalent among new funds and ETFs. In this respect, WisdomTree believes
the Funds' experience is consistent with the experience of other new
funds, and expects that growth in fund assets will have a lesser impact
going forward.
Fund Expenses:
As with all funds and ETFs, the WisdomTree Funds incur portfolio
management and other expenses not incurred by their underlying indexes.
For example, the WisdomTree Indexes do not reflect management fees,
expenses, taxes or other costs incurred by the WisdomTree Funds. These
expenses lower the Funds' dividend yields and contribute to the
difference between Fund yields and index yields.
It should be noted that the first distributions for our domestic funds,
which pay on a quarterly basis, suffered from the same factors back in
October. The most recent distributions for the domestic funds are
showing figures that are back in line with the estimated yields of the
underlying index. Also, you have not "lost" these dividends that you
were expecting, instead they are in the form of capital appreciation
instead of income.
If you have any further questions feel free to email or call
1-866-909-9473 and we'll be happy to answer them.
Thank you,
Ryan Davis
Given WSDT just sold shares to instituitional investors for $3, what is your take on the current share price - rather expensive and one to avoid? Thanks!
Time for the newbie question of the day: Do people holding the double-short ETFS like DXD and QID have to pay dividends? If so, will their brokers pull them around the same dates listed above? Thanks.
I have never thought about WisdomTree as a potential stock to hold. This should not be taken as positive or negative opinion I just haven't thought about it.
The double short ETFs use derivatives so there is no dividend to pay out
Thanks for the clarification on your position as a response to my question on whether WSDT is expensive. Happy Holidays!
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