What to Keep in Mind About Distributing ETFs
A distributing ETF doesn’t seek to exploit the compounding effect. This takes place when the dividends are employed to buy new shares of the fund, which ultimately results in the value of the investment increasing exponentially over time. Moreover, a distributing ETF entails an active management if the investor decides to reinvest elsewhere the dividends; which means investing more time and efforts.
Example of a distributing ETF: VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF
By selecting 100 global stocks screened on their dividend yields, resilience and growth, this ETF makes regular distributions. Thus, it could be an ideal choice for those investors seeking income. However, it should be noted that there is no guarantee that companies who have paid dividends in the past will keep doing so in the future.