Catching Year-End Payouts with ETFs

 |  Includes: BIK, EEB, EEM, VWO
by: Gary Gordon

You’re not sure how long the market uptrend will stay intact. You’re wary of a spooky October. Nevertheless, you’re strongly considering an allocation to regional stock ETFs in the next 2-4 weeks.

Perhaps what you need, then, is a bit of insurance.

More specifically, a number of regional ETFs make larger semi-annual or annual payouts in December, effectively increasing the dividend payment you’d receive over a comparable investment with a quarterly payout schedule.

For instance, let’s say you want exposure to the MSCI Emerging Market Index. You know that the iShares MSCI Emerging Market Fund (NYSEARCA:EEM) has larger trading volume than Vanguard Emerging Market (NYSEARCA:VWO), which might result in a better execution price. On the other hand, VWO costs a little less. What to do?

You take a look at the distribution schedules.

EEM pays out on a semi-annual basis, giving the emerging market investor reason to expect 1.5% in December. Meanwhile, Vanguard is still serving up its VWO distributions on an annual basis such that… the emerging market investor can expect 3.0% in a lump sum come December.

Keep in mind, these “moves” are more for traders. Still, when every little bit can make a difference… the end-of-year distribution schedule is worthy of inspection.

In some cases, there won’t be a difference. Claymore BRIC (NYSEARCA:EEB) and SPDR BRIC 40 (NYSEARCA:BIK) are extraordinarily similar over time. And they both have the same year-end annual payout. You might anticipate 1.6% in December from BIK or EEB.

Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company may hold positions in the ETFs, mutual funds and/or index funds mentioned above.