When the fund pays dividends, it will take out part of the proceeds from the fund and distribute them to everyone. After paying dividends, the net value of the fund will fall, but the value of investors' total assets will remain unchanged, which is equivalent to giving their own money to themselves. It doesn't seem to make sense, so why pay dividends?

Why does the fund have dividends?

1. The fund contract stipulates that dividends must be distributed when the income reaches certain conditions, and the fund manager must distribute at least 90% of the net income of the fund in cash.

2, profit-taking, so that part of the investor's income can be settled in time, suitable for cash dividends.

3. Reduce the net value of the fund. Everyone likes to buy cheap things, and so does buying funds. After the fund pays dividends, its net value drops, which can attract more people to buy.

4, marketing means, the fund must make money to pay dividends, so the fund company will also reflect the good performance of the fund through regular dividends.

5. Dividends turn part of the proceeds into cash and distribute them to investors by lightening their positions, which is equivalent to allowing investors to redeem some funds and allowing fund managers to lighten their positions without violating the regulations.

The quality of fund dividend depends on the trend of the fund in the later period, and the choice of cash dividend or dividend reinvestment needs specific analysis. Dividend reinvestment does not require reinvestment fees, and cash dividends do not require fund redemption fees.

After reading the above introduction, I believe everyone has a better understanding of why the fund should pay dividends. Fund dividends seem meaningless, but after in-depth study, you will find that most funds attract more people to buy after dividends. When the net value rises to the level before dividends, investors who participate in dividends will not earn.