NZSX50 - Good News!

[Bjauck]

[QUOTE=percy;783211]

Not exact,but the index going from 2,809.82 to 11,482.29 is near enough to 15% compound per year..

That does look impressive.
However that is a gross index return. How many investors actually reinvest, for all their shareholdings, all their gross dividends on the date when they are declared?

I am unclear as to what is included in the NZSX50 index. As the index includes gross dividends, does that mean it includes the dividend declared (on the date it is declared) plus imputation credit if any? If the dividend is unimputed, does it include the gross dividend without an allowance for tax.

[percy]

Yes the gross index can be misleading,however it is the only NZ index I can find.Being gross I take it takes the gross dividend.
I have noted my own portfolio's net value is approx five and a half times the value it was in 2009. On top of that I have received sizeable dividends.

[Bjauck]

I can't really do a meaningful comparison apart from my RYM holding. I have halved (unfortunately) that holding over the intervening period, but my remaining shares have been held at least since 2009. In the time since 2009 their capital value has increased by 8.3 times. (About 23% annual increase compounded.)

The dividend yield was minimal initially. I am very confident that the rest of my portfolio as a whole would not have performed so well!

[peat]

•  Gross Total Return (TR) versions reinvest regular cash dividends at the close on the ex-date

without consideration for withholding taxes.

• Specifically for the S&P/NZX Indices, S&P Dow Jones Indices also calculates Gross with Imputation indices that reinvest the regular, as reported

dividend on the ex-date, along with any associated Imputation Credits, as declared by the respective company.

[winner69]

•  Gross Total Return (TR) versions reinvest regular cash dividends at the close on the ex-date

without consideration for withholding taxes.

• Specifically for the S&P/NZX Indices, S&P Dow Jones Indices also calculates Gross with Imputation indices that reinvest the regular, as reported

dividend on the ex-date, along with any associated Imputation Credits, as declared by the respective company.

I gather that for the NZX50 any dividends received are reinvested across all the stocks in the index.....not just reinvested in the divie paying stock

Like for a SPK divie some of the proceeds goes into buying more ATM (which doesn’t pay divies

That’s what a broker told me once.

[peat]

I gather that for the NZX50 any dividends received are reinvested across all the stocks in the index.....not just reinvested in the divie paying stock

That's weird. And impractical.
Meaning even a DRP would not cut it!

Dumb!

[winner69]

That's weird. And impractical.
Meaning even a DRP would not cut it!

Dumb!

Brokers are good at making stuff up so he may have misinformed me eh

It was put this way - you’re ‘invested’ in The Index (not the individual stocks) and any income (ie dividends received) is reinvested in The Index

Computers can do all sort of ‘impractical’ calculations

[Bjauck]

•  Gross Total Return (TR) versions reinvest regular cash dividends at the close on the ex-date

without consideration for withholding taxes.

• Specifically for the S&P/NZX Indices, S&P Dow Jones Indices also calculates Gross with Imputation indices that reinvest the regular, as reported

dividend on the ex-date, along with any associated Imputation Credits, as declared by the respective company.

As I understand it, no investor investing at the same weightings in the index stocks could attain the return that the NZSX50 indicates. So the NZSX50 is an inflated index.

Irrespective of tax and imputation issues, just with relation to dividends, FBU for example has a lag of about of about three weeks from the ex-date until the payment of the dividend is made to shareholders. That’s when they could reinvest in the index stocks.

[SailorRob]

The NZ capital index is the NZ50C and should be used when comparing to other indexes such as S&P 500 or ASX200. We are about 45% above the previous 2007 high now, or about 170% off the low in 2009. Brain Gaynor wrote a great article in the Herald regarding the NZX50 being Gross and how misleading it is comparing to other indexes.

[Beagle]

So...if one has easily beaten the NZX50 gross index of a gain of ~ 30% in 2019 they really have done well....not saying I have or haven't, just pointing out its not as easy to do this as it seems.