What’s the reason behind this etf?
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@emppsb Compared to the normal world ETF in my portfolio.
The iShares World Equity High Income (IE000KJPDY61) takes a completely different approach to a classic world ETF such as the one from HSBC (IE00B4X9L533). While the HSBC ETF passively tracks the MSCI World Index in order to participate one-to-one in the performance of the global economy, the iShares fund is an actively managed instrument that primarily aims to generate a high, regular cash flow.
The key difference lies in the strategy: the iShares ETF combines a selected equity portfolio with the sale of call options (a so-called covered call strategy). The fund receives premiums from these options, which it distributes to investors in addition to the dividends. This leads to a significantly higher distribution yield, which is currently often in the range of 9 to 10 % per year, while the classic HSBC ETF only delivers the usual market dividends of around 1.5 to 2 %.
However, this focus on income comes at a price. As upside gains are limited by the options sold, the iShares ETF will lag behind HSBC's normal world ETF in strong bull markets. In addition, the running costs of 0.35% p.a. are more than twice as high as those of the HSBC counterpart (0.15% p.a.). The reason for this ETF is therefore not the maximum total return, but the desire for stable, high distributions with slightly lower fluctuations in the portfolio. It is therefore particularly suitable for investors who already want to live off their capital or are looking for a defensive component with immediate cash flow.
Brief summary of Gemini.
The iShares World Equity High Income (IE000KJPDY61) takes a completely different approach to a classic world ETF such as the one from HSBC (IE00B4X9L533). While the HSBC ETF passively tracks the MSCI World Index in order to participate one-to-one in the performance of the global economy, the iShares fund is an actively managed instrument that primarily aims to generate a high, regular cash flow.
The key difference lies in the strategy: the iShares ETF combines a selected equity portfolio with the sale of call options (a so-called covered call strategy). The fund receives premiums from these options, which it distributes to investors in addition to the dividends. This leads to a significantly higher distribution yield, which is currently often in the range of 9 to 10 % per year, while the classic HSBC ETF only delivers the usual market dividends of around 1.5 to 2 %.
However, this focus on income comes at a price. As upside gains are limited by the options sold, the iShares ETF will lag behind HSBC's normal world ETF in strong bull markets. In addition, the running costs of 0.35% p.a. are more than twice as high as those of the HSBC counterpart (0.15% p.a.). The reason for this ETF is therefore not the maximum total return, but the desire for stable, high distributions with slightly lower fluctuations in the portfolio. It is therefore particularly suitable for investors who already want to live off their capital or are looking for a defensive component with immediate cash flow.
Brief summary of Gemini.
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•@GoDividend having the ftse all world as a core portfolio, makes any sense to add this one? Yes or no, why?
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