IdOp wrote: I'm not sure why they would have to adjust for dividends declared but not yet gone ex. ISTM in that situation the dividend is baked into the stock price already. Once it goes ex, the stock price drops (all else equal) and the unreceived dividends (essentially, a short-term corporate bond) should be accounted for. From your description GAAP gets this part "right".
Yes, I think I had forgotten the 'baking in'.
IdOp wrote: OTOH forcing the ETF to deduct from the NAV a potential liability (declared dividend not yet gone ex) seems inconsistent with this to me.
It does create a timing problem for the investor (an individual or a fund or a fund of funds), but it is GAAP for the payer: the Directors/Trustees have committed the entity to making the dividend/distribution payment. It would be misleading not to accrue the liability. Unless of course there should be a different GAAP for ETFs than for all other entities...but how can we argue that YLO should accrue its distribution payable but a Barclay's ETF should not? Of course the situations are not identical: With YLO, balance sheets are available for investor scrutiny only quarterly, yet an ETF is expected to release an accurate NAV daily.. The 'pro-forma' solution might indeed be is the best one - give the investors what they need without undermining GAAP.
IdOp wrote:It's kind of like saying the BCE takover was a done deal before all the conditions were met, in this case the ex-dividend date having arrived.
Not the same thing at all IMO.
IdOp wrote:So the "pro forma" aspect I suggested would be to correct this inconsistency and give investors a number they can meaningfully (a) compare with an appropriate benchmark, and (b) use to guide their bid or ask prices in trades. Clearly, the situation as it stands has led to confusion and not been explained well by Barclays.
Agreed.