Beta Divharvester Etf Units – I’ve been buying the Betashares Australian Dividend Harvester Fund (HVST), an ASX-listed exchange-managed fund, for probably two years now. The appeal of this fund is that it pays a very high dividend yield (around 10% to 14%) and it pays dividends every month. The monthly dividend payment is usually deposited into my bank account in the middle of the month and each payment is approximately the same. So HVST makes it very easy to live on income. As a result, I have collected over $100,000 worth of HVST.

However, it is becoming increasingly clear that there are many things wrong with this fund, the biggest of which is that it has underperformed the ASX 200 in recent years.

Beta Divharvester Etf Units

That said, I’m not criticizing the fund or Betashares. I was well aware that the dividend yield method used by the company creates weak positions when the markets rise. This is because the fund manager buys a stock that pays a high dividend before the dividend is paid and sells the stock after the dividend is paid. Since share prices usually fall after a dividend is paid (when the value of the company decreases with the reduction of capital), naturally the process of collecting dividends can result in lower capital gains.

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Another irony is that while the ASX 200 was down, HVST also fell significantly, which makes me question the company’s risk management response. According to the Betashares blog article Managing Risk: The Dangerous Combination of Market Crashes and Retirement:

One way to manage sequence risk is to use an aggressive exposure strategy that aims to reduce market risk to the downside…. BetaShares combined its expertise with Milliman to launch the BetaShares Australian Dividend Harvester Fund (the managed fund) last November. The fund invests in large-cap Australian stocks with the objective of providing at least double the return of the broader Australian market, while reducing volatility and mitigating downside risks.

Based on this explanation, I was hoping that the fund’s risk management cover would reduce the negative movements, but the HVST vs. XJO performance chart shows that when XJO turns lower, HVST is much lower. When XJO goes up, HVST doesn’t tend to go up much, if at all, which is why HVST has fallen about 20% in recent years, while XJO has managed to increase value by a modest 5% at the same time. .

Like I said, that doesn’t mean I won’t continue to invest in this fund. The monthly average and maximum dividend payments are very reasonable, and any capital loss incurred by the fund over time can, in my opinion, be compensated by investing in riskier sectors, e.g. investing in technology stocks, emerging markets or small companies, or even investing in internal income ETFs like GEAR. For example, if you invest half of your money in HVST and half in GEAR, you will conveniently receive monthly income from HVST and any capital losses will be recouped from your investment in GEAR due to the amplification of market movements. Note that the limitation of the half HVST and half GEAR strategy is that when the market falls, so does GEAR. Additionally, another problem with GEAR and HVST is that their management expense ratios are much higher than the broadest ETFs from Vanguard or iShares. HVST and GEAR each have an expense ratio of 0.80%, Vanguard’s VAS is 0.14%, and iShares’ IVV is 0.04%.

Is Betashares Dividend Harvester Fund (asx:hvst) A Yield Trap?

However, I recommend many Betashares products. Another Betashares ETF I’m interested in is their new sustainability ETF called the Betashares Global Sustainability Leaders ETF ( ETHI ). I tend to buy ETFs in groups of $10-$25,000 at a time, so I plan to buy the ETHI group and blog about it later. I have a positive opinion on Betashares because they offer many new ETFs.

Update June 18, 2017: HVST’s poor price performance is explained in the blog article Betashares Capital Vs. Total Return: How to accurately estimate your fund’s performance. If the result includes income plus franking credit, the overall performance of HVST looks good. With the number of ETFs growing rapidly, identifying the best ones for your portfolio needs is no easy task. That’s why we created this report.

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This report provides investors with an easy-to-digest analysis of Australia’s fastest-growing ETF sector. It includes the best ASX-listed products of managed funds, the highest and lowest rated ETFs based on our star rating process, the best and worst performers and the mechanisms that control the flow of retail investment.

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Investsmart Australian Exchange Traded Fund Report

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In the three months to the end of September, continuing to actively intervene in Australian ETFs, a number of new products were launched and regulatory breaches totaled $30 million for the first time.

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The Problem With Hvst (betashares Australian Dividend Harvester Fund)

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There’s no point in comparing liquidity, so the S&P 500 ETF is cheap and meant to be tracked.