High dividend etfs?

Hey Nunz.

There are quite a few of these around these days, and I’ve invested in one myself a while back. After a while, I decided it made more sense for me to not continue down this path and go with other ETFs instead (simple index funds). Here’s why…

• High dividend ETFs come with higher management fees.
  
• They come with a much smaller number of stocks in the portfolio (far less diversified than a typical index fund like VAS for example).
  
• They are also more concentrated in terms of sectors because of the above.
  
• Aussie shares already provide a very healthy level of income.
  
• Performance is often less than the index given the smaller portfolio of stocks. So in addition to the above, there is sometimes a performance drag too.
  

After thinking about the trade-offs a bit more, I decided against the high yield ETF route. Even though I do like receiving a good level of dividend income from my investments that is. Having said that there are probably one or two that are decent options, though I wouldn’t make it a big part of a portfolio given the reduced diversification. Others may see it differently.

Hope that helps, and all the best.
Dave