ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
ERD50,
I use VYM. The single stock issues of CTL are irrelevant. ... .
I used CTL (which came up in a recent thread) as a current example to counter your statement that the BOD 'know what percentage of profits can be distributed to the shareholders'. (edit/add: pb4uski and OldShooter provided the general case,)
And VYM is made of of stocks like CTL. In fact CTL is VYM's 150th largest holding (out of 451), so it is not irrelevant.
https://investor.vanguard.com/etf/profile/overview/VYM/portfolio-holdings
... The correct benchmark for VYM is the value index. VYM outperforms its benchmark. ....
I disagree. The 'value index' is just another representation of the sector. For equities, the benchmark is the total market. Why venture into sectors, when the total market is so easily available at a very low ER, unless they actually out-perform the total market? Why benchmark sector-to-sector? Just benchmark against the grand-daddy of them all, the total market.
So another back-test. Here VYM under-performs the total market (CAGR of 7.7% vs 8.44% for VTI), though with a small reduction in std dev (14.17% vs 15.24% for VTI).
If we adjust for near-equal performance with an 81/19 AA to bonds, the VTI/Bond mix has significantly lower std dev ( 11.86% vs VYM's 14.17%). This is to Bernstein's point (I think it was Bernstein, can't swear to it), you are better off adjusting the AA, than to try to goose returns with high-yield. He didn't find any alpha in the high yield, and neither have I.
http://bit.ly/2S0YkXN << short link to back-test
... I completely disagree that the stock market can put a value on a company with more precision than the companies employees can set the correct dividend policy. 100% disagree with you.
OK, but it's irrelevant. What is relevant is performance, money in my pocket. And I have yet to see data that shows high-yield will put more money in my pocket than the Total Market.
-ERD50
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