Best time to buy funds

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cswift01
Posts: 819
Joined: Thu Dec 08, 2016 10:46 am

Best time to buy funds

Post by cswift01 »

Dear all,

Good Wednesday morning (to some still night).

I have been wondering something and I was hoping that many of you enlightened folks could help me understand how this works. I'm interested in understanding when the dividends are paid to the C, S and I Funds. I have quite a bit on this topic and I have found how the dividends thing works with the TSP (they give you more shares, but put the value of the shares goes down slightly http://www.govexec.com/pay-benefits/pay ... nds/20859/). The reason I'm asking is because I'm trying to update my dates of purchase when I get in and out of funds. For example, many mutual funds pay their dividends on the 25th/26th of June. While the month of June might be bad for the equity funds in the TSP, returning to the C, S or I Funds (depending on strategy) on the 24th would allow you to make use of this improvement (if they followed a typical mutual fund's disbursement). This is a full week before July and could add up over 20 or 30 years.

Any thoughts?

Oh and I've been wondering something else. If the "dividends" are disbursed at the end of June to the equity funds thereby lowering their value, could that be calculated into our strategies thereby making June seem worse than it truly is? That's a separate thought.

I appreciate any insights.

Best,

Me

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evilanne
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Joined: Thu May 14, 2015 6:52 pm

Re: Best time to buy funds

Post by evilanne »

Actually, how the dividends thing works with the TSP should be corrected to read:
they DON'T give you more shares, but the value of the shares goes UP slightly (when dividends are paid/reinvested) As stated in the link "the fund's value increases, but the dividends' contribution is hidden." http://www.govexec.com/pay-benefits/pay ... nds/20859/ It is mutual funds or stocks that give you more shares if you choose to reinvest dividends.

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cswift01
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Re: Best time to buy funds

Post by cswift01 »

evilanne wrote:Actually, how the dividends thing works with the TSP should be corrected to read:
they DON'T give you more shares, but the value of the shares goes UP slightly (when dividends are paid/reinvested) As stated in the link "the fund's value increases, but the dividends' contribution is hidden." http://www.govexec.com/pay-benefits/pay ... nds/20859/ It is mutual funds or stocks that give you more shares if you choose to reinvest dividends.


Yes, i see where I was wrong. However, the question still remains, when are the dividends paid out?

Oh and this explanation was helpful viewtopic.php?f=14&p=52097 but didn't answer the dates.

Best,

Me

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Aitrus
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Re: Best time to buy funds

Post by Aitrus »

It depends on the company. If there's 500 companies in the S&P 500 (C Fund), then there's 500 different dates. Most companies pay quarterly, semi-annually or annually.
Seasonal Musings 2022: viewtopic.php?f=14&t=19005
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JimmyV
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Joined: Fri Nov 06, 2015 7:19 pm

Re: Best time to buy funds

Post by JimmyV »

Aitrus wrote:It depends on the company. If there's 500 companies in the S&P 500 (C Fund), then there's 500 different dates. Most companies pay quarterly, semi-annually or annually.


I have a mutual fund with about 100 different companies and it pays dividends semi annually and another that pays dividends quarterly...not based on exactly when each company pays dividends. I suspect that the TSP funds are similar but I also don't know the specific dates. Buying shortly before dividends are distributed would seem to provide some benefit.

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cswift01
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Re: Best time to buy funds

Post by cswift01 »

JimmyV wrote:
Aitrus wrote:It depends on the company. If there's 500 companies in the S&P 500 (C Fund), then there's 500 different dates. Most companies pay quarterly, semi-annually or annually.


I have a mutual fund with about 100 different companies and it pays dividends semi annually and another that pays dividends quarterly...not based on exactly when each company pays dividends. I suspect that the TSP funds are similar but I also don't know the specific dates. Buying shortly before dividends are distributed would seem to provide some benefit.


That's exactly what I've been wondering.

Its good to see I'm not the only one here wondering about this. ;-)

The point is that in many of our strategies, we leave the market in June, August, September and even October. June and September (especially for ETFs) tend to be months that dividends are distributed.

Ok, so I will keep on searching.

Thanks,

Me

wisepierre
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Joined: Thu Feb 18, 2016 11:55 pm

Re: Best time to buy funds

Post by wisepierre »

From my understanding from the last time this came up, dividends are automatically factored into the share price for all TSP funds, the day/night after the market closes and the dividends have been paid out.

So unless there is a date(s) where a lot of companies pay their dividends, it would be difficult to time the market.

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cswift01
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Re: Best time to buy funds

Post by cswift01 »

wisepierre wrote:From my understanding from the last time this came up, dividends are automatically factored into the share price for all TSP funds, the day/night after the market closes and the dividends have been paid out.

So unless there is a date(s) where a lot of companies pay their dividends, it would be difficult to time the market.


Yeah, I've been wondering how that would work. Would the dividends be distributed daily? I would think that would be administratively burdensome...but what do I know. ;-)

On the other hand, I sent an inquiry to the TSP asking about this. I asked them when the dividends are distributed in the equity funds. They responded with "thank you for asking if dividends are distributed to the TSP funds...". Apparently the "if" and "when" got confusing for the respondent. Hopefully I will get some clarification soon.

Thanks,

Me

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cswift01
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Joined: Thu Dec 08, 2016 10:46 am

Re: Best time to buy funds

Post by cswift01 »

So, i sent another question asking for the dates or comparable times. They responded again by saying that I was asking "how" dividends were distributed, which was in daily prices. I responded again asking for a month or time per year (June, December?) or whatever. I'm now expecting with their 3rd response that they will talk to me about "how" dividends are distributed and not when. I suppose its a closely guarded secret...

Me

wisepierre
Posts: 93
Joined: Thu Feb 18, 2016 11:55 pm

Re: Best time to buy funds

Post by wisepierre »

My guess is that the "when" is whenever the dividends pay out for each individual company's stock -- they are immediately factored into the TSP share price.

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evilanne
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Re: Best time to buy funds

Post by evilanne »

You may want to ask whether Blackrock gets dividends the for the funds in Shares or Cash, as they could do either if they actually own the stock but in thinking about this, they could also purchase other instruments that mirror the benchmark for the fund. If you simply reinvested the dividends, at some point they would have to some buying/selling of shares to bring the portfolio back in line with the benchmark since not all stocks pay dividends.

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cswift01
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Re: Best time to buy funds

Post by cswift01 »

evilanne wrote:You may want to ask whether Blackrock gets dividends the for the funds in Shares or Cash, as they could do either if they actually own the stock but in thinking about this, they could also purchase other instruments that mirror the benchmark for the fund. If you simply reinvested the dividends, at some point they would have to some buying/selling of shares to bring the portfolio back in line with the benchmark since not all stocks pay dividends.


Good point, EA, however, I'm going to give them a few more days to respond. They were a bit annoyed with their previous message (I can't help but find that comical since they didn't respond correctly twice) so I'm not holding my breath if they will respond.

I am considering calling them on the phone. I'm wondering if there is a policy against giving out the "when" dates. By now they must know about seasonal investing.

A good follow up could be to understand how dividends are paid, per your suggestion. Thanks.

Me

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