DAX dividends

[Kodiak]

I know that DAX is a total-return index and the dividens are reinvested

 

But how is this done and when?

 

 

[Kodiak]

DAX 30 or Germany 30

[Guest PandaFace]

It’s not that divs are reinvested, more that the calculation which the index is based off already takes that into consideration so it doesn’t matter if they have / haven’t been payed by the individual companies.

 

...I think

[Kodiak]

But the dividends change over time so sometimes they need to adjust?

[Guest PandaFace]

Nah if the calculation never takes it into account. For example the FTSE is price weighted, so when a company pays a div the price goes down, and the index goes down because an individual stocks market cap / price goes down.

 

Dax is performance weighted and doesn’t take the price or market cap into consideration. It takes a companies performance into account and therefore doesn’t reduce when a company pays a div and its market cap reduces.

[JamesIG]

Exactly that 

 

Markets such as the FTSE etc are Price weighted 

 

...whilst the DAX is a performance index, which measures total returns rather than the simple Price x Shares. As wikipedia quotes: "The total return on a portfolio of investments takes into account not only the capital appreciation on the portfolio, but also the income received on the portfolio. The income typically consists of interest, dividends, and securities lending fees. This contrasts with the price return, which takes into account only the capital gain on an investment."