# Franking Credits – How Much More Are You Really Getting?  ## About - Author: Passive Investing Australia - Title: Franking Credits – How Much More Are You Really Getting? - Tags: #articles - URL: https://passiveinvestingaustralia.com/franking-credits-how-much-more-are-you-really-getting/ ## Highlights Take a look at how much the share price drops on shares with franked dividends when they go ex-dividend, and you’ll notice that it is quite a lot *more* than the dividend amount. This is because franking credits are largely *priced-in*. Most of the benefit you get from franking credits is lost by way of the share price falling. Only you don’t realise it because the way it is lost is not obvious. As a result, you’re not getting the full return from them that you think you are. When franking credits were first introduced and before people understood it, they provided the full return, but once it became widely understood, the market priced-in a big part of the added return, and it has been arbitraged away. --- This begs the question, what impact would this have as a reason to invest in Australian shares over their natural market cap proportion? Previously we would choose Australian shares to help mitigate currency risk, but now we have a global AUD-hedged fund to reduce currency risk without the added concentration risk of over-weighting Australian shares. Once that has been addressed, we can still say that Australian shares give a higher return due to franking credits, so that means overweighting Australian shares still offers a reward for the higher concentration risk, but with quite a bit less benefit for the higher risk, it might be worth re-examining how much value over-weighting Australian shares really provides and how much we want to overweight them. ---