How important are re-invested dividends when reviewing the returns of various stock market indices?
U.S. stocks average about 1.5% dividend payout each year. If you are comparing the return of your actively managed fund or passively managed index fund to a stock market index, it is important to make accurate comparisons. For example, if the return of your actively managed fund or your passively managed index fund includes reinvested dividends, you should compare them to a stock market index which includes re-investment of dividends. It is often difficult to tell if the market index includes or does not include re-investment of dividends. If you visit the web site of the firm which maintains the market index (Standard & Poors for the S&P 500, Wilshire Associates for the Wilshire 5,000, Frank Russell Company for the Russell 3,000, etc), you can usually find the annual return of the market index with and without re-investment of dividends. Many investment advisors recommend that U.S. investors increase their asset allocation to non-U.S. investments. What can I do if there are no ETF’s o
