Long-term Return or Short-term Savings: Where is Your ETF Investment Headed?

The differences in management fees may seem minimal at first glance, but upon closer examination, they could have significant implications for your long-term capital returns. The 0.35 percent management fee of the Premium Income ETF is notably different from the average fee of 0.06% of the ten largest ETFs, which includes the low-cost Vanguard S&P 500 ETF. The latter offers 0.03% per year and shows total costs of just 0.3% after ten years, while the fee for the Premium Income ETF amounts to a hefty 3.6% over the same period. Another distinguishing feature is the distribution frequency: instead of quarterly dividends, the income-oriented ETF generates monthly returns. Whether this is an advantage or disadvantage depends on personal preferences regarding the payment schedule. Although total returns since its launch in 2022 have matched the market index like the Vanguard S&P 500 ETF, the price of the Premium Income ETF has only grown by 28% so far, while the market leader has increased by 46%. Despite this, the ETF remains attractively priced, especially during phases of rare market developments, and offers future-proof dividend distributions. Currently, the total distribution per share for the last year was $5.38, which corresponds to a yield of 10.7% with a share price of about $58. While the described dividend strategy does not guarantee steadily increasing distributions, the concept of moderate growth over time could be appealing. Long-term investors might anticipate returns achieving a total return of around 10% per year, which would mean a substantial increase in dividend participation of 159% after ten years. Such a development would allow an effective yield of 62% in 2024. While the price per share may become a secondary concern in the future, the ETF stands out for its potential to represent a lucrative source of income in the long term—unless a sale is unavoidable. For investors who feel they have missed their opportunity on lucrative stocks: experts currently advise "adding" to certain stocks. Recommendations are presently being made for three promising companies. Now might be the perfect time to invest before the opportunity passes.