Starting ETF's

Hey

I am starting to build up ETF’s in my portfolio now.

Was looking at BT, as the price has tumbled, but decided to start an ETF. Spent around 2 hours looking at what one to invest in. Wanted a Dividend paying one, although Robo Global was VERY appealing.

Decided to go with US HY Corp Bond (IHHG).

If BT shares are still under £2.05 on pay day, i may prurchase a few.

Anyone else have IHHG in there portfolio?

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What madae you decide to go with IHHG

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It pays a dividend. The price has dropped, so may rise again. It is more a little test to see how ETF’s rise and fall etc…

Also, the shares they hold, some have fallen so look like they might rise.

You are aware that the ETF only contains sub investment-grade ( high-yield) rated bonds right?

Hey

What does that actually mean?

I looked at the holdings and it has Western Digital, T-Mob, Sprint, so some big names…

I’ve noticed that when the main indexes FTSE100 S&P 500 are down, bonds / gilts and commodities tend to being doing ok and vice versa. So it’s good to have a slice of these too. I’ve done some research on the Vsnguard US Corp bond and it provides a reasonable return statistically.

Decided i need to look at ETF’s a bit more. Shall move back to shares.

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Do you not find shares need considerably more research than ETFs? :thinking:

Why are you seeking a “dividend paying” one? Most will pay a small dividend anyway, I guess what you actually mean is that you want a “high” dividend paying one.
But do you know why?
For long term investments, you typically wouldn’t care about the dividend yield. You would only care about total returns.
For investing small amounts of money, it is actually disadvantageous to have most of the returns be in dividend form, because even at a high yield you might only be receiving pennies or a handful of pounds - which aren’t enough to reinvest in to another share, so that money just sits as cash, losing you compounding benefits.

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No, I know what to look for on shares, thanks to Simply Wall St. I have no where near mastered shares, but think I have a basic to intermediate understanding.

I was just looking at ETF’s for knowledge.

Hey

A dividend paying ETF isn’t a must, but the money I had to invest, the IHHG was the best.I decided to invest in BT to take time to look into ETFs more in-depth.

If you was a decent starting investment that pays an extremely reliable dividend I’d give my vote to City of London Investment Trust (CTY on London Stock Exchange.)

http://tools.morningstar.co.uk/uk/cefreport/default.aspx?SecurityToken=e0gbr00qxa

An investment trust works in a similar way to a fund (ETF or mutual) there are some differences but I wouldn’t worry about those finder details as they are more technical and don’t impact the investment.

These guys are not on the cheap side in terms of ongoing fees, they are active managers and being listed on London Stock Exchange isn’t cheap. I like to think you get value for money though.

This was the first big dividend paying stock I ever picked up, they are heavily UK focused but spread across multiple industries. They are very well known for never reducing their dividend.

Personally I don’t hold this investment anymore as I go for accumulation units or don’t value a dividend as much.

Quick question. But do some/all ETF’s pay out interest at certain points of the year?

It’s not “interest”, but virtually all “dist” ETFs will pay out something in dividends, because they will invest in companies that pay some dividends.

It depends on the type of ETF.
Your HY corporate bond ETF tracks fixed income securities, where income of underlying = interest payments (the coupon).
A FTSE100 ETF tracks the stocks within the FTSE100, where income of underlying = dividend payments (a share of the company profits)
ETFs usually have 2 versions: Accumulating Income or Distributing Income. The first will reinvest the income described earlier, the latter distributes the income on a regular basis into your account.

So where it says “Income will be distributed as cash” that means i will get the money in my FreeTrade account?

Out of interest, do you get a notification for that and dividend payments?

I believe you will get notified, but I’ll let someone from FT answer that.

You will indeed receive the income in cash into your account. You can then choose to reinvest this amount or just keep it in cash

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Yes, these are treated as dividend payments so at the moment, we’ll send you a message from Intercom with a push notification, that explains where the cash has come from. In the future, you’ll receive a notification from the app & see the payment in your activity feed.

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What are peoples view of the emerging market one?

Emerging market equity ETFs are good if you want more volatility, but it comes with a lot more risk.

Emerging market bonds are a bit safer but you have a greater risk of default.

Personally I like “Vanguard Emerging Markets Govt Bd Idx;ETF” as a nicer balance between risk and emerging markets, this is a bond fund with low fees and decent 1, 3, and 5 year performance.

https://investor.vanguard.com/etf/profile/VWOB

However do your own research before hand and make sure you know why you want to have emerging markets in your portfolios.