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What Do Additional Entitlements Mean for Small Investors?

Paul Rickard

Please clarify what the purchase of additional entitlements @$1.42 or thereabouts would mean for a small investor.

We hold 1000 TCL and based on 3:37 would have 81.06 shares available via the rights issue (rounded up I think to 82).

If current pricing of $12.99 is fully priced then $11.40 plus $1.42 seems like a reasonable purchase allowing for transaction fees with a .17 margin.

Understanding that prices could change, why would we not buy, say 1000, TCLRA if we were intending to increase our holding, instead of buying TCL on market.

I am assuming that TCLRA are a 1:1 ratio rather than 3:37 ?

Thanks for all your commentary and insight.

 


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HVST

Paul Rickard

I have a question relating to the performance of the Betashares ETF “HVST” over the last 12 months.

The objective of the ETF is to pay a monthly Dividend, so naturally this is of interest to retirees like myself that need regular income.  But this seems to be at the expense of steadily eroding the investments in the Fund.   Over the past 12 months the NAV per share has steadily declined from around 19.9 to the current 17.03.  That’s a capital loss of around 15%.

Meanwhile, the total dividends that I have received (including franking credits) amounts to just over 12%.  Net net, my total return over the last 12 months is around MINUS 2.5% to 3%.   Meanwhile the market as a whole has returned significantly more.

Can you give me some general comments of the HVST strategy please?  Is the HVST fund’s investment approach strategically flawed:- (a) in terms of their investments being focused only in the highest dividend paying stocks, and (b) in terms of their dividend payout percentage being unrealistically high?

I am trying to decide whether to dump all my shares in this ETF.

Kind Regards

 


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Synthetic ETFs

Paul Rickard

Hi

In a recent response to a question on ETFs Paul mentioned a “synthetic ETF”. Can you explain what this is, and how its different from an ETF tracking say the ASX 200?

Many Thanks

 


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