XSTR is not just a straight forward ETF that track the SONIA rate and never goes down. For an ETF with a low risk rating, it’s 6 monthly price drops every February & August for the last 2 years come as a surprise. What causes them? It can’t be a sell off after the xd because this year’s xds were in February & May.
It’s the dividend distribution. You see similar in other distributing ETF’s, e.g., UESD
@maccgordon
XSTR payout dates are Feb and August since 2023, see link, under section ‘Dividends’
XSTR
The periodic price drops will be the size of the declared dividend payout at that time.
You might consider CSH2 - tracks SONIA too but is Accumulating, so no dividends payouts and no price drops.
If you are reinvesting dividends anyway, it can make more sense.
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If you are correct then why didn’t the price drop after the May '24 distribution
and why did the price drop in August when there wasn’t one scheduled?
CSH2’s price drop is at the start due to the bid/offer spread so you do need to hold for days / weeks to “break even”.
I don’t see xstr isin LU0321464652 in that link
Fund went xd on 21 Aug 24
All ETF’s have a bid/offer spread so you’ll always have that if you buy at offer and then value the holding at the bid price
Hi @maccgordon
Shrimper is right - your link is to the wrong XSTR - the EUR version.
Here is the later announcement covering GBP version :-
Amundi Dividend Announcement
For CSH2, LSE quotes a spread of 0.04% - XSTR is 0.06%.
SONIA at 4.95% suggests 1.5 working days should cover it, or 2 days for XSTR to break-even (assuming 200 in a year).
Pay the spread once for CSH2, or each time you reinvest dividends for XSTR.
CSH2 performance better than XSTR over 1y and 3y according to Morningstar.
Your choice of course, XSTR could make sense if not reinvesting dividends.
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Sorry I referenced the wrong dividend announcement.
Many thanks. That clears up my question.
Many thanks for the link & analysis.
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