Will the fund income increase its share?
The income of the fund will not cause the change of share, only the new subscription and dividend reinvestment will cause the change of share. The meaning of fund share refers to the number of funds held, and the subscribers and holders of the fund will enjoy the benefits according to the number of funds held, because the fund refers to the product of total share and unit net value. The total share of the fund has been determined at the time of sale, so only the change of unit net value will affect the change of fund market value, and the total share is fixed.
When the unit net value rises, the total market value of the fund rises, and the income of fund holders rises. When the unit net value goes down, the income of fund holders goes down, which has nothing to do with the change of share, because the total share will not change with the change of unit net value or fund income. There are two situations that may cause changes in the total share of the fund. The first one is that the original purchaser re-purchases or the new purchaser in different places makes a new purchase.
When new funds are invested in the fund, it will inevitably bring more shares, because buying this fund is essentially a subscription. Fund managers absorb funds by issuing new fund shares, and subscribers buy corresponding shares. Therefore, the total share and market value of the fund have expanded simultaneously.
Secondly, the change of fund share or total share is caused by dividend reinvestment, that is, the dividend amount of fund income is directly converted into fund share, which leads to the increase of total share. In this process, fund holders no longer receive dividend returns, but convert all the gains obtained by the previous fund into fund shares, and increase the market value of the fund by increasing the total share, and the share held by investors also increases accordingly.
Generally speaking, whether the fund returns investors with dividends or reinvested with dividends will be clearly stated in the instructions before the fund subscription or transaction. Fund subscribers and investors can choose appropriate dividend-paying methods to invest according to their own preferences and needs.