Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi I was intrigued by your response to a question in last weeks Q & A regarding the HVST ETF. "We are not fans of the HVST – we think the ETF runs a flawed strategy" Could you please elaborate a little bit on your thoughts around this ETF. Cheers, Carl
Hi Carl,
The strategy started out as an aggressive dividend stripping strategy, simply buying a stock for the dividend, getting the dividend and selling the stock and moving to the next one. It is a very simplistic strategy. They have tweaked it over time because it didn’t work but the share price down over 50% in 9 years tells the tale. We appreciate they’ve paid dividends along the way, and the performance table on their website will paint a better picture, but the performance they show will only be achieved if the investor reinvests all dividends back into the fund, which defeats the purpose. There are no free lunches is the market, and this strategy incorrectly thought there was, hence the flawed strategy call.
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