eMAXIS Slim and dividends

[TelecInvestor]

Hi people,

I'm just another one of those trying to understand that 0円 dividends from eMAXIS Slim funds

I've been quite some posts just before getting into some eMAXIS Slim fund, in particular the following :

viewtopic.php?t=659

Basically, what I got from that post is that "People don't get dividends but the gains are reinvested automatically to increase the value of the fund".

I'm wondering how that works if these funds are "simply" tracking an index, and if there is any real benefit (Don't consider myself as non-beliver but just want to better understand).

Wouldn't that mean that the trust would be outperforming the index gains by the additional dividend yield that is getting reinvested?

The opposite option would be that the fund itself is inefficient and that the dividends are lost in trying to keep up with the index itself, since my understanding is that similar options that have the included stocks do give capital gain (at selling) plus the dividends.

Not sure if my logic is flawed but just trying to make sense of the "dividend reality" and how one of this awesome index fund work.

Any further comment or help would be appreciated

[fools_gold]

The fund tacks a total return index, not a price index. There's more about the difference here:
https://www.investopedia.com/terms/t/to ... _index.asp

[TelecInvestor]

Many thanks for your comments! Related to this, for a long-term (not really interested in FIRE at this moment) strategy, I opened I new question to understand the capital gain/growth strategy that I think that applies to the eMAXIS funds:

viewtopic.php?f=16&t=700

[gaijinkun]

For very long period of time the main gain from stocks is not price appreciation but the contribution of dividends.

Is there a way to check what funds or stock provide you dividends. What is Japanese word for dividends and how they calculated?
Specifically in SBI account.

[Bushiman]

After seeing the RetireJapan Facebook post on the 'compounding machine' it made me think even more about our eMaxis Slim funds...
So, I got my trusty calculator out... (I wonder if this should really be posted in RetireJapan for Dummies hahaha)

If the way we make money from our eMaxis Slim funds is from the final selling, how much has the base price of the fund got to change to equal the same return from an investment that compounds? That was my question...

Scenario:
I have ¥1,000,000 and buy 100 shares of some eMaxis Slim fund at ¥10,000 a piece.
I chuck those numbers into a compound interest calculator set at a yearly 5% interest with no extra deposits.
In 10 years I should end up with ¥1,628,895.
That's an increase of about 63%.
To get that same result with my eMaxis Slim funds, the base price (¥10,000) would have to rise to ¥16,289 over 10 years.
(Av. increase of ¥629/year)
Does that sound about right?

Lets bump that to 20 years.
The compound interest calculator says I should end up with ¥2,653,298 this time.
That's an increase of 165%.
To get that same result with my eMaxis Slim funds, the base price (¥10,000) would have to rise to ¥26,533 over 20 years.
(Av. increase of ¥827/year)

30years.
The compound interest calculator says I should end up with ¥4,321,942.
That's an increase of 332%.
To get that same result with my eMaxis Slim funds, the base price (¥10,000) would have to rise to ¥43,219 over 30 years.
(Av. increase of ¥1,107/year)

Is this right or have I lost the plot? Hahahaha!

[OkiBum]

Looks correct to me.

The key point as mentioned above is that this index tracks the total return and not the price return. (Which is a good thing!)