Ish Coreftse100 Share Price (ISF)

The price of an index-tracking ETF should be linked to the value of the index, not market sentiment about the ETF itself.

ISF is a little more complicated as it collects dividends on the underlying shares. So if a number of FTSE constituents go ex-div on the same day, as you explained below, that should lower the FTSE index and the ETF price.

But in principle, Black Rock should be able to distribute the dividends it collects, independently from ETF price.

Maybe another factor is redemptions by large institutional investors. If they sell large chunks of their ISF back to Black Rock on ex-div day, reducing its asset value, maybe this could explain a price change in the ETF.

Hi minsky.

It's the market that adjusts the SP on ex-dividend day, not Black Rock. Typically it will open down (by the value of the dividend) but other market factors (good day / bad day) will come into play throughout the day.

https://www.investopedia.com/articles/investing/091015/how-dividends-affect-stock-prices.asp#toc-the-effect-of-dividend-psychology

"After a stock goes ex-dividend, the share price typically drops by the amount of the dividend paid to reflect the fact that new shareholders are not entitled to that payment."

Thanks for trying to help me with this Icwanderer. Up to yesterday I'd thought the ISF price was automatically linked to the FTSE 100 value, and not related to people buying or selling ISF, as with a normal share. I'd also assumed the price of regular shares ex-div was due to market behaviour (people not paying the pre-ex-div price once the dividend had been given, or selling once they'd gained the dividend) rather than some mechanism altering the price. So ISF paying a dividend shouldn't affect its price.

Does that mean its Black Rock which subtracts the dividend value on ex-div day?

The dividend in question is 10.4p - which is approx 1.4% of the current share price.

Thanks Icwanderer.

I assumed that regular shares normally drop on ex-div day because people sell. But the ISF price is supposed to be linked to the price of the underlying instrument - so shouldnt have changed by more than the dividend.