The art of passive investing is famously so boring, some practitioners gamble with a slice of their assets in order to stop themselves running amok in the sweetie shop. They seek kicks like accountants who go planking on police cars at the weekends.
It’s a risky business with a high chance of coming a cropper.
What we need are signs of progress that prove we’re advancing gloriously into a beautiful future. Eventually. And that’s not always easy to get from a passive portfolio in volatile times.
It’s especially tough when all your holdings are in accumulation funds that are seemingly going nowhere.
Fattening up your funds
Accumulation funds automatically reinvest dividends for you. The fund price bumps up as the dividends are ingested but it often seems like an inconsequential burp when prices are in the red.
Contrast that with the feedback you get from distributing funds, which pay out dividend cash straight into your brokerage account. Every deposit is a little win, a tiny little jackpot dispensed by the financial fruit machine.
Even when the going is rough, those pay outs are the positive feedback I need to remind me that owning equity is not about whether today’s share price brings victory or defeat. I have a stake in productive businesses that will keep handing me back a share of their earnings for years to come.
And if I keep reinvesting those dividends, then the compounding effect of owning those money pumps will have a dramatic impact on my returns over the long term.
But that positive feedback is easily missed with accumulation funds. Most do not directly inform investors about dividend performance, and passive investors are not the type to be monitoring fund prices on a daily basis to catch that dividend day swell.
How to find dividend distributions for accumulation funds
If you’ve been missing out, then take a look at the secret store of money that accumulation funds have been stashing away on your behalf.
To uncover the dividend distributions of your accumulation fund:
- Go to Trustnet and search for your fund using the drop down menus on the home page.
- Most index funds will be in the Unit Trusts & OEICs section.
- Use the Offshore Fund tab to find foreign domiciled funds (e.g. much of the Vanguard range).
- Click on the dividend tab from the fund overview.
- Make sure you click on the right fund as Trustnet tends to bundle lots of similarly named fund variants in the same place.
- Multiply the dividend amount by the number of units / shares you held in the fund on the payment date to discover how much you’ve earned in pounds and pence. (Don’t include any units you bought during the ex dividend period.)
- Enjoy closet kicks from the money flowing from Global Capitalism plc to You plc.
- Possibly plot the gains on some kind of spreadsheet. (It depends on how much you want to stretch the joy).
Trustnet doesn’t always come up trumps, so here’s an alternative method:
- Go to Investegate’s advanced search page.
- Put your fund manager’s name (e.g. Dimensional) in the Company Name field.
- Set the All Categories field to Dividends.
- Change the Time Span field to something more generous like six months.
- Click the Search box if nothing happens automatically.
- A list of dividend payment announcements should come up.
- Click on the Dividend Payments link in the right-hand column.
- The dividend announcement should pop up. Read it and you’ll hopefully find your fund and its dividend result somewhere within.
Take it steady,