In addition to active equity funds and fixed income funds, under the background of advocating dividend distribution this year, many broad based ETFs in the domestic public offering market announced to join the "army" of dividend distribution, and some products even received their first dividend in many years.
According to the analysis of insiders, the passive fund takes the net price index (without considering dividends and dividend reinvestment) as the performance benchmark, so the stable excess return mainly comes from dividends and dividend reinvestment of constituent stocks. With the growing advocacy and encouragement of the regulatory authorities on dividends of listed companies, ETFs holding high-quality corporate stocks will obtain more excess returns relative to the net price index, which provides sufficient conditions for ETF dividends.
First dividend of representative broad base ETF
Recently, China Southern Fund announced that its CSI 500ETF will pay its first dividend in 2024 with April 30 as the base date for income distribution. This dividend plan is to pay 0.87 yuan for every 10 fund shares, and the cash dividend will be paid on May 22. Wind data shows that, based on the number of fund shares on the benchmark date, the total dividend of China Southern Securities 500 ETF will exceed 1.2 billion yuan.
It is worth noting that China Southern Securities 500ETF is the largest China Securities 500ETF in the domestic public offering market, with a scale of 78.708 billion yuan as of May 13. This ETF is also the sixth largest non commodity ETF. According to the fund contract, when the growth rate of the net value of the fund units exceeds the growth rate of the underlying index over the same period by more than 1%, income distribution can be made. This is the first time that the ETF has announced dividends since its establishment in February 2013.
Among the first batch of CSI A50ETFs that have attracted much market attention before, Morgan CSI A50ETF explicitly mentioned in the fund contract that the ETF should carry out income distribution at least once every quarter, and evaluate the excess return rate of the fund relative to the underlying index on the last trading day of each quarter (excess return rate=growth rate of fund share net value - growth rate of the underlying index over the same period), When the excess return rate is greater than 0, income distribution will be carried out. The proportion of income distribution will not be less than 60% of the excess return rate. When the excess return rate is less than or equal to 0, income distribution will not be carried out.
ICBC CSI A50ETF quickly adjusted the principle of income distribution after its establishment. Part of the adjustment shows that the fund manager assesses the cumulative rate of return of the fund and the cumulative rate of return of the underlying index in the same period on a quarterly basis, and can distribute income on the premise of meeting the conditions for fund dividends. The ETF announced its first dividend less than a week after its listing. The dividend plan is to distribute 0.066 yuan per 10 fund shares, with the dividend scale exceeding 5.1 million yuan.
In addition to the above broad based ETF, Huatai Berry Hushen 300ETF also completed its annual dividend at the beginning of this year. The dividend plan is to distribute 0.69 yuan for every 10 fund shares, with a total dividend of nearly 2.5 billion yuan. Compared with the Southern China Securities 500ETF, Huatai Birui CSI 300ETF, Huaxia CSI 300ETF, Huaxia SSE 50ETF and other domestic representative broad-based ETFs can almost maintain the frequency of annual dividends.
Provide more flexible capital control
The reporter of China Securities Journal interviewed many public offering institutions and learned that the passive products such as ETF take the net price index (without considering dividend and dividend reinvestment) as the performance benchmark, so compared with the index performance, the stable excess return of ETF mainly comes from dividend and dividend reinvestment of constituent stocks.
"Especially for the constituent stocks of the CSI A50 index, the dividends of companies are often predictable cash flows, and the corresponding capital scale can be obtained through relevant calculations. This part of the cumulative dividends can be divided into corresponding periods, and the index fund products can be regularly compulsory dividends, and the dividends will not dilute the fund shares," said a public offering person in Shanghai.
The person said that some fund management teams will use innovation and other methods to improve the utilization rate of funds and increase the product income to a certain extent, but at the same time, the fund transaction costs and the demand for position building or closing brought by huge redemption will also dilute some of the excess income.
In addition, ETFs also provide investors with more flexible capital control rights through dividends. The manager of a public offering index fund in Beijing said that the ETF would force the dividend to be reinvested under the condition of no dividend; After the establishment of dividend clauses, investors are provided with the option to use this excess return to add positions, and also to "pocket it", cash this excess return in cash and not reinvest it with the portfolio.
Increase in dividend ratio of constituent stocks
The latest Regulatory Guidelines for Listed Companies No. 3 - Cash Dividends of Listed Companies and the Decision on Amending the Guidelines for the Articles of Association of Listed Companies issued by the CSRC have adopted a series of regulations to promote listed companies to continuously enhance their dividend awareness, optimize dividend methods, cultivate dividend habits, improve dividend levels, and restrain abnormal dividends, Promote the overall dividend level of listed companies to rise steadily.
With the increasing advocacy of the regulatory authorities for dividend distribution of listed companies, it has become a future trend to promote the dividend distribution of listed companies more than once a year, and to increase the dividend proportion of leading enterprises. Therefore, Tianxiang Investment Advisory Fund Evaluation Center believes that the dividend ratio of broad-based ETFs will increase or have a lower cash flow basis. The above third-party institutions also believe that the ETF products holding these high-quality enterprise stocks will obtain more excess returns relative to the net price target index, which provides sufficient conditions for dividend distribution. The dividend strategy adopted by ETF also responded to the policy guidance and actively cashed in the dividend income to investors.
In the market environment where regulation encourages dividend distribution, in addition to rate competition, dividend distribution has also become another "way out" for the homogenization competition of broad-based ETFs to some extent.
"The increase of ETF dividend proportion and frequency may become the direction of fund companies' promotion. Although the dividend strategy does not directly affect the income level of investors, regularly allowing investors to hold the same shares but obtain dividend cash flow can improve investors' sense of gain on the one hand, and on the other hand, due to the nature of dividends such as tax exemption and free redemption rate, it has advantages in tax rate reduction. " Tianxiang Investment Advisory Fund Evaluation Center said.
In addition, the index tracked by the broad-based ETF contains a wide range of constituent stocks. Cui Yue, an analyst at Morningstar (China) Fund Research Center, believes that the dividend strategy can attract investors to participate, and at the same time, it can guide funds to multiple areas of the market, thus enhancing market activity and liquidity, and improving market pricing efficiency.
Broad based ETFs are characterized by low rates, transparent operation and simple operation. They are often the main collective investment tools for tracking the market index, and they have multiple attributes of primary market redemption and secondary market transactions, which are suitable for short-term transactions, as well as long-term allocation and value investment. With the continuous guidance of the regulation on dividends of listed companies, Tianxiang Investment Advisory Fund Evaluation Center believes that the dividends of broad-based ETFs may gradually guide investors to make long-term investments, and their long-term allocation value is more prominent.
