Fund dividend method: cash dividend or dividend reinvestment?

Fund dividends are a happy event for ordinary people, just like the trees planted have finally blossomed and borne fruit. Fund dividends have always been a problem that people pay close attention to. According to the regulations, funds that meet the dividend conditions will pay dividends at least once a year. There are two ways to pay dividends: cash dividends and dividend reinvestment. What's the difference between these two ways? Is it more cost-effective to reinvest dividends? This paper will analyze the dividend distribution methods of these two funds for everyone.

Investors generally know cash dividends, and domestic closed-end funds stipulate that 90% of the expected annualized income of the fund in the current period must be distributed to fund holders in cash. The fund's cash dividend is distributed in the same way as the stock cash dividend, and is distributed according to each investor's share. If you hold 6,543,800 units of a fund, and each unit pays a dividend of 0.20 yuan, then you can get a cash dividend of 20,000 yuan. Similarly, in the above dividend situation, if the fund shares are selected for dividend when investing, and the net value of the fund shares on the dividend base date (announced the next day) is 1.20 yuan, then 20000 1.20 = 16667 fund shares can be obtained, and the fund shares held will become1/kloc.

The fund share dividend is also called reinvestment, and the cash dividend continues to be invested in the fund and accumulated to expand the investment scale. For this kind of reinvestment, under normal circumstances, fund managers do not charge subscription fees and encourage investors to continue to invest in the Fund. If the subscription rate is 2% and the cash dividend reinvestment fund is selected, then only (20000-200002%)1.20 =16333 fund units can be purchased, which is 334 less than the direct dividend selection of fund shares. If investors are optimistic about a fund, they may wish to consider choosing fund share dividends.

Of course, investment is for return, which is understandable. What needs to be considered clearly is whether the dividend payment method is the best choice.

Fund dividend is realized on the basis of performance, which is a way to deal with the expected annualized expected income and a subjective behavior. Most investors believe that getting money is the safest. Fund cash dividends have the feeling that investors can expect annualized expected returns to be "safe". Investors not only get cash income, but also eliminate the uncertainty of the book growth of the fund's net value. These people generally use the advanced dividend method and will not use the dividend reinvestment method. From a conservative point of view, this is a wise choice. However, from the perspective of financial management, the cash withdrawn by investors has lost the opportunity to appreciate again.

First of all, the cash dividend only divides the money in the account. For example, Mr. Zhang bought 2,000 funds when the fund was issued, and chose the cash dividend method to obtain the expected annualized expected income. A month later, the fund's net share rose to 1.3 yuan. In this way, the fund assets held by Mr. Zhang reached 2600 yuan. If each fund pays dividends to 0.3 yuan, Mr. Zhang's cash account is 0.3*2000=600 yuan. Accordingly, the net value of her fund unit becomes 1.3-0.3= 1 yuan. We can see that Mr. Zhang's fund assets have changed from 2600 yuan to 2000 yuan, and the sum of the expected annualized expected returns of the principal has not changed, which is still 2600 yuan.

The decline in the net value of the fund has created opportunities for investors who are optimistic about the expected annualized income of the fund in the future. For those investors who get cash dividends, if they continue to buy funds with dividend money, they will have to pay fees, management fees and other expenses, which also brings trouble to themselves. If you choose to reinvest in dividends, you can waive the subscription fee. Regardless of theory or experience, the performance of dividend reinvestment is better than that of cash dividend.

For example, Ms. Chen bought 2000 funds with a net unit value of 1 yuan. After one year, the fund will pay dividends to 0.3 yuan. After dividends, the unit net value is 1 yuan. After another year, the fund unit rose to 1.3 yuan, and Ms. Chen redeemed it. If the handling fee is not considered, Ms. Chen's expected annualized expected return on investment is calculated as follows:

The income from cash dividend investment is: 2000 * 0.3+(1.3-1) * 2000 =1200 yuan.

The expected annualized expected return of dividend reinvestment investment is: 0+1.3 * (2000+600)-2000 =1380 yuan.

Obviously, the expected annualized expected return of dividend reinvestment is better than cash dividend, but the choice of cash dividend or dividend reinvestment depends on the general trend. If the fund is in good condition, it is recommended to choose dividend reinvestment.