Analyze what impact the fund I hold will have on me if it pays dividends
Many fund investors will encounter fund dividends. So what does fund dividends mean to us newbies? Is it good for funds to pay dividends? The editor has compiled here what impact the fund dividends I hold will have on me for your reference. I hope you will gain something from the reading process!
What are fund dividends?
Fund dividends are a form of investment return that distributes part of the fund's income to investors. This part of the income is originally part of the net value of the fund's shares.
To put it simply, it means returning part of the money earned by the fund to investors.
Before dividends are distributed, the fund company will issue announcements to inform three important dates:
Equity registration date: Only registered holders on this day can participate in dividends (PS: Only buy on that day and cannot participate in dividends).
Ex-dividend date: The date when dividends are deducted from fund assets. The net value of the fund shares will be deducted from the dividend amount of each fund, so investors will usually see an abnormal drop in the net value on this day, and their accounts will experience temporary "losses".
Dividend payment date: the date when dividends are distributed to investors. The foundation transfers dividend funds from the fund custody account on this day. Investors please be patient and wait for the dividends to arrive~
Is the dividend a "profit" or a "loss"?
Fund dividends are equivalent to returning the money that belongs to you to you in different ways , will not generate additional gains or losses, but will only be the realization of the growth of the fund's net value. After dividends are distributed, the net unit value of the fund will decrease, and investors will either have more "cash" or more "shares", but the total assets will not change as a result.
Therefore, the decline in net worth caused by dividends is a normal phenomenon (the total value of your assets remains unchanged, if you take away part of the money, the rest will be less). In addition, it is wrong to buy before dividends in an attempt to "earn" dividends~
What are the benefits of dividends to investors?
Generally speaking, fund dividends There are two ways: cash dividends (more "cash") and dividend reinvestment (more "shares"):
Cash dividends are about converting part of the income into cash income, and you will be safe in time, and you will be free of charge. There is no redemption fee;
Dividend reinvestment means that the money earned from dividends is used to directly purchase the fund again without charging a subscription fee.
Therefore, dividends give investors more choices - they can choose better investment channels according to market conditions, and they can save part of the handling fees for the entry and exit of funds.
How to choose a dividend method? Investors who want to be safe in a timely manner and have a need to use funds in the near future can choose cash dividends; investors who are optimistic about the future market and do not need money in the short term can choose dividend reinvestment. In addition, if you set up a fixed investment plan, then choosing to reinvest the dividends can better exert the compound interest effect.
What are the conditions for fund dividends?
Not all funds can pay dividends. Usually, being able to pay dividends means that the fund has obtained a certain amount of income. The fund contract will stipulate the fund income distribution plan, taking Bank of China Research Select as an example:
Under the premise of meeting the relevant fund dividend conditions, the fund will conduct income distribution assessment on a quarterly basis, based on the last trading day at the end of the quarter. It is the base day for income distribution. If the profit available for distribution per unit fund share exceeds 0.05 yuan at the end of the previous quarter, income distribution will be carried out in the first month of this quarter, and the income distribution ratio will not be less than 60% of the profit available for distribution on the base day for income distribution.
There are two main ways to distribute fund dividends: one is cash dividends, and the other is dividend reinvestment.
According to the "Securities Investment Fund Operation and Management Measures", if the investor does not specify the dividend method, the default income distribution method is cash dividends. Investors can go to the institution where you purchased the fund to modify the dividend distribution method before the equity registration date.
For example, if you hold 100,000 shares of a fund, each fund share will receive a dividend of 0.05 yuan: If you choose the cash dividend method, you can get a cash dividend of 5,000 yuan; if you choose to reinvest the dividends, the dividends will be distributed The net value of fund shares on the base day is 1.25 yuan. Then, the basic citizens can be allocated 5,000 yuan ÷ 1.25 yuan/share = 4,000 fund shares, and the fund shares become 104,000 shares. Since the total assets of the fund are reduced due to dividends, the net value of the fund decreases after dividends are distributed.
The default dividend method of open-end funds is cash dividends, but investors can change it independently according to their specific personal circumstances and changes in fund prices. When changing the dividend method, agency sales customers need to bring their ID cards and securities cards to the agency where they originally purchased the fund to make changes; direct sales customers can make changes themselves through the fund company website or telephone trading system.
When the fund manager distributes dividends, it needs to set a certain day on which registered holders can participate in dividend distribution. This day is the equity registration date. The ex-dividend date is a predetermined date when the total amount of dividends distributed is subtracted from the fund's assets. On the ex-dividend date, the net value of the fund shares will be ex-dividend based on the dividend ratio.