Possibly a controversial topic ;)
In the last few days I've been writing more and more in the comments here that I don't think ETFs like Fidelity Global Quality Income are so great, at least for young people. So that I don't have to write the same thing over and over again, I'm going to write a post.
As many of the ETFs compared here have only been around for 5-7 years, I can unfortunately only make a comparison of performance over 5 years. That's quite short, I know. However, it is good in that we had two difficult years. Apart from the fact that, as a young person, I would only consciously choose a distributing ETF if I were planning my portfolio for retirement, for example, I have now also chosen the distributing variant of the standard ETFs here for better comparability.
My opinion is that anyone with a long investment horizon will get the best return and probably even the best payout if they choose a standard ETF.
The others are suitable as an add-on or main ETF as soon as you reach a certain age (and retirement is just around the corner) or you have a lot of capital and want to live off the dividends.
Now for an overview (source: Morningstar)
$HMWO (+0,01%) MSCI World dist
Performance 5 years: 13.11% p.a.
Last 12-month distribution: 1.41% p.a.
Simulation, investment today 100,000 euros, 30 years with the performance assumed above (note: this is too high and is not intended to suggest that you could achieve this safely. The performance over a longer observation period is worse p.a.)
Result: approx. 4,000,000 euros
Distribution, assuming that it (the div yield) remains constant: EUR 56,400
$VWRL (+0,07%)
FTSE All world dist
Performance 5 years: 11.63% p.a.
Last 12-month distribution: 1.28% p.a.
Simulation, investment today 100,000 euros, 30 years with performance assumed above
Result: approx. 2,700,000 euros
Distribution, assuming that it remains constant: 34,500 euros
Incidentally, this again shows my general problem with the AllWorld compared to the MSCI world... When does it ever perform better? How often have EM outperformed DM?
To colleagues with an investment horizon > 30 years => Do you really want to leave 1.3 million euros lying around?
$FGEQ (+0,1%)
Fidelity Global Quality
Performance 5 years: 11.07% p.a.
Last 12-month distribution: 2.2% p.a.
Simulation, investment today 100,000 euros, 30 years with the performance assumed above
Result: approx. 2,300,000 euros
Distribution, assuming that it remains constant: 50,600 euros
Insight: I have considerably more capital with the MSCI World and potentially a higher dividend.
But: It is true that the 5-year dividend growth is higher with Fidelity than with the MSCI World dist, and not insignificantly so. It is therefore more likely that Fidelity will be able to keep its dividend payout constant than the MSCI World. However, the difference in capital of over 1.5 million euros is very significant.
However, it should be noted that this ETF effectively takes the MSCI World, then filters according to quality aspects (there is also the $IS3Q (-0,09%) which also performs better) and then filters by distribution. The amount of the distribution is at most relevant for the weighting. Or how else can you explain the fact that NVIDIA, the dividend stock par excellence (irony), has a not-so-small position in the ETF? And please don't tell me about dividend growth: Yes, it's great for NVIDIA, but when will I receive a distribution that isn't 0.03%? In 80 years? What I'm trying to say is that the ETF doesn't really have a dividend approach. It has a nice payout ratio and nice dividend growth, but it doesn't generate this by buying stocks with a real dividend focus. You can find that good or bad.
$GGRP (-0,47%) WisdomTree Dividend Growth:
Performance 5 years: 7.34% p.a.
Last 12-month distribution: 1.57% p.a. (reduced)
Simulation, investment today 100,000 euros, 30 years with the performance assumed above
Result: approx. 830,000 euros
Distribution, assuming that it remains constant: 13,000 euros
Why do I still think it's a good addition: it brings a few defensive companies into the portfolio or gives them a higher weighting. Depending on market expectations, this can therefore be a good addition.
In contrast to Fidelity, it also has a significantly different approach to the MSCI World, for example.
$VHYL (-0,37%)
FTSE All world High Div Yield
Performance 5 years: 7.62% p.a.
Last 12-month distribution: 2.97% p.a.
Simulation, investment today 100,000 euros, 30 years with performance assumed above
Result: approx. 900,000 euros
Distribution, assuming that it remains constant: 26,730 euros
$TDIV (+0,67%) VanEck Morningstar HighDiv
Performance 5 years: 11.07% p.a.
Last 12-month distribution: 3.98% p.a.
Simulation, investment today 100,000 euros, 30 years with the performance assumed above
Result: approx. 2,300,000 euros
Distribution, assuming that it remains constant: 91,540 euros
Now that's a dividend ETF to be proud of. It performed comparatively well in 2022 in particular, unlike the others. This is precisely what makes it interesting as an add-on.
It has a focus on finance.
It is by no means a stand-alone ETF, but in my view it is a great alternative as an addition to generate dividends.
(5Y DivGrowth 7.5%, lies between MSCI World and Fidelity)
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Conclusion: In terms of the capital generated, the MSCI World is without doubt the best choice. With regard to the distribution, it is not possible to make such a general statement. In any case, there is no conceivable scenario in which I would choose Fidelity over the MSCI World for a long-term investment horizon and capital accumulation - not management. I simply leave so much capital lying around...
My recommendation for beginners is therefore:
MSCI World, about 70-80%, distributing or accumulating depending on your goal
A small engine (more on this in a moment), approx. 20-30%
For more experienced investors with a dividend target:
MSCI World, dist, approx. 50-60%
VanEck, approx. 15-20%
Motor, approx. 20-30%
I would go for Fidelity if I either have capital and can live off dividends, or if I'm approaching retirement and want to supplement it:
Fidelity instead of MSCI world: 80%
VanEck: 20 %
(Motor, only in the first case: capital to live off distributions and at the same time still aiming for further wealth accumulation)
About the engines:
Of course, the Nasdaq comes to mind and I would go for it in principle. I would also prefer it to the MSCI World IT because, contrary to popular belief, the Nasdaq is not limited to technology. It currently also includes a number of companies from the consumer discretionary and consumer staples sectors, for example. Nevertheless, its performance is of course extremely convincing. I wouldn't care about overlaps with the MSCI world, as they probably wouldn't lead to any company suddenly having a 10% portfolio share or anything like that.
And then I recently dug up something else: $LAB2 (+0,32%)
Unfortunately, it hasn't been around that long, but the index has been around for 7 years and in these 7 years the index has had a performance of 14.78% p.a., unfortunately no statement for 5 years (Nasdaq in 5 years: 21.62%). So it turns out that it can't keep up with the Nasdaq, but it is not quite so technology-focused and not limited to the USA. I bought it myself because it offers an excess return over the MSCI World and at the same time includes companies that were not previously in my portfolio and shifts my weighting.
The fund invests in strong brand values.
However, because it does not generate such a strong excess return as the Nasdaq, it is not really an engine in the classic sense, but perhaps suitable for a more conservative approach.
PS: The S&P 500 is not included in the overall comparison because all the others have a global approach. That would be somewhat unfair. Of course, its performance is significantly better.
-No investment advice
