does any one buy funds just before they go ex dividend and then sell afterwards? - Funds - Forums (2024)

No.

If you're being serious – the dividend's simply subtracted from the price on the ex-div date, so there's no possible way to benefit from timing your buying or selling .. You're just as good selling the fund the day before the ex-div date – makes absolutely no difference.

All a dividend is is self-liquidation .. Your fund is worth 100p; ex-div date it goes to 95p; then the dividend gets paid 5p .. Market noise obscures how simple this is, but the income's just coming out of your investment, no matter how well you try and time it.

No.

(US research, but anyway...) Reminded me of this Swedroe piece which notes there are some funds which engage in just such behaviour for the purposes of artificially "juicing" their yield higher : https://www.etf.com/sect...vidend-juice?nopaging=1 . Mentions an extreme example of a fund with a 2000% portfolio turnover and a yield of 19%.

Article also notes that it's a completely irrational thing to do (although of course when funds are doing it they're simply quite rationally exploiting their investors' irrational preference for dividends).

As a relatively new investor I must admit I was curious about this subject. Although, as stated above, I've done some research and was already aware the stock price is adjusted down accordingly at the time.

It may have been the LTGE inc. money that fell into my account today that got me thinking more about this, but it all sounds too obvious and if money were to be made many others would already be doing it.

Even so, I get the vibe from responses so far that it's not a route to fast or easy money and rather pointless, but I will look into it myself a bit more as for all I know with a little patience, not buying last minute and being in no hurry to sell afterwards one could set aside 10 or 20k per year to flip around across perhaps 6 or so decent dividend payers.

All you'd be doing is incurring a lot of effort and trading expense to churn capital into income with no extra profit. Just spend the capital if you need the money; the divi chasing is a very roundabout way of doing the same thing.

Surely it's a way to lose money taking account of buying and selling costs as well as waste of time.

Works much better the other way round, sell just before ex div, then buy back afterwards, often a share will end up dropping by an amount greater than the dividend....now you have more shares, hopefully for less money!

Of course there will be times this won't work out, but overall if you're disciplined, patient & careful, it can work as a strategy (there used to be a thread on II following one guy's on-going "scrip dividend poker" with HSBC).