Banks.ru spoke with an investor who invests in dividend stocks of foreign companies. To create a portfolio, he decided to repeat the structure of the exchange-traded Fund NOBL.

The choice of the aristocrat

While the financial authorities are thinking about how to protect the Russians from the risks in the stock market and luring investors, “the people’s OFZ”, investors use any means to circumvent the legal obstacles and earn foreign exchanges. Private investor, Vadim decided to invest in the securities of Western companies that pay high dividends. Its strategy is based on up portfolio exchange-traded Fund ProShares S&P 500 Dividend Aristocrats (NOBL).

Why not just buy shares of the Fund? According to Russian law, securities of a foreign ETF or exchange traded Fund may only be purchased by qualified investors. The paper presents a number of major ETF on the OTC market in the framework of the project of the Association of NP RTS. If you weren’t an investor and your equity is less than 3 million rubles, access to foreign exchange traded funds you are closed. You can buy paper company FinEX funds that are traded on the Moscow exchange as well as stock mutual Funds several UK. However, the majority of these funds are traded in rubles, so they are interesting not for all investors who wish to capitalize on the stock of foreign companies.

NOBL invests shareholders ‘ funds in the shares of companies that regularly pays dividends. In its portfolio of 57 companies, including Coca-Cola, Procter & Gamble, WalMart, McDonald’s. The value of the assets exceeds 76 billion dollars. From the beginning the quotes NOBL (repeat dynamics in a portfolio of shares) grew by more than 9%.

Vadim initially invested 5 thousand dollars. Selected companies with the highest share in the Fund’s portfolio, as well as those who have had the highest payouts to shareholders. All these securities are traded on St. Petersburg stock exchange, and can be easily purchased via a Russian broker. The investor was lucky, he began to buy the stock at the end of 2018, when the market experienced large-scale correction. The contraction in the S&P 500 index was a record during the month declined by 14%, dropping below 2,400 points.

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However, since the purpose of the investor was not to capitalize on the growth of securities and regularly receive dividends, he continued buying after the stock indexes started to recover. Now, according to Vadim, the value of its portfolio amounts to 30 thousand dollars. About 90% invested in dividend stocks, and the rest he keeps in dollars. In the companies included in NOBL, invested approximately half of the funds. It is estimated that in six months, he was able to earn about 5%, the best result was shown by Procter & Gamble shares, which brought the investor taking into account dividend yield of 17%, as well as securities of the Target Corporation, which yield for the same period was about 18%.

The index in help

The strategy used Vadim to assemble a portfolio of dividend shares look attractive, especially from the viewpoint of the novice investor. No need to search and select companies, you can simply repeat the action of the management of the selected Fund and not have to pay the management fee. It seems popular with some investors avtosvedenie, but without paying for the service more experienced trader that you copy.

How much can you earn by copying the ETF or mutual Fund? Look at the example of one of the largest exchange traded Fund iShares Core S&P 500 following the same index. In the Fund’s portfolio is over 500 companies. First, the value of its securities increased by 13.2%. Suppose the investor decided to invest in the top 10 companies occupying the largest share in the portfolio of the Fund.

To buy at least one share of these companies, the investor took about 4,5 thousand dollars. In this case, the portfolio returns from the beginning of the year would be around 7.8%. But to copy the top 10 positions Fund iShares Core S&P 500, following the weight of each security in the portfolio, will cost about 11 thousand dollars. But the yield of the portfolio since the beginning of the year would be significantly higher — about 12.5%. Mainly due to the growth of Microsoft stock, whose share in the portfolio is maximum. With the beginning of the year securities rose by almost 24%. Also significantly increased the shares of Apple and Amazon, which are also among the most significant securities portfolio of the ETF. These estimates do not include the fee that the investor paid the broker when you purchase shares.

What you pay for

Market participants interviewed by Banks.Roux was skeptical of the idea to copy the portfolios of the funds. In particular, according to the Manager of UK “Opening” Dmitry kosmodemyansky, in this case, the investor was lucky, because he was in a phase of market growth. “There are apt traders saying — “do not confuse their brains with a bull market” (Don’t confuse your brains with a bull market). Almost any briefcase, accidentally typed “investor” at the end of the year, would give the result more than achieved using the described manipulation 5%,” he says.

The probability that the investor will be able to show a good result for a long period of time, copying the portfolio of the Fund, is not so high. According to financial Advisor “BCS Premier” Anton Berliner, investor, of course, can be a portfolio of 10-20 shares and save on fees, but the advantages of such a strategy is injected. “First, the proportion of shares in the Fund may change, it is necessary to follow, to respond and to pay a Commission to the broker for the change portfolio. And secondly, the more action you have to accomplish, the greater the likelihood of mistakes,” he enumerates. For example, if not enough to include in the portfolio Daye-three shares with a small weight, to lose part of the income. “If you try to invest, repeating the structure of the Fund, it is difficult to achieve full compliance and broker commissions for the year will be higher than the loss on the impairment of the Fund for management costs,” says the analyst of “freedom Finance” Vadim Merkulov.

Another disadvantage for the investor is that the value of shares may differ at times, if not on the order. For example, paper Coca-Cola are 51.5 dollars, and Amazon shares above $ 1,700. There are more expensive papers, and to include them in a portfolio, the investor will have to have a rather respectable sum. In the example Fund iShares Core S&P 500, the amount has increased more than twice compared to the amounts spent would be an investor purchasing one share of each company, although it was only about ten issuers.

Moreover, experts say, there is no point in copying the portfolios of Russian mutual Funds, which often cost investors much more expensive from the point of view of the commissions for the administration than exchange-traded funds. “Of course, there is a great desire to save on commissions. However, how long it will take effort, time and money?” — asks Berliner. But the main thing is that in the majority of cases managers reveal the structure of the Fund with a small time lag. During this time, the composition and the share of securities in the portfolio of the mutual Fund may change drastically. Therefore, according to Berliner, the investor is best to choose shares on the Moscow stock exchange, filtering by the parameters (capitalization, sector, dividend) and buy. In any case, it will save you time and money, which would otherwise just go on Commission to the broker.

Albert KOSHKAROV, Banki.ru

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