In the fund market, according to different classification standards, there are many types of funds. The most common classifications are open and closed. Most of the funds you usually buy are open-end funds, but there are also many excellent closed-end funds that are deeply loved by investors. So, do closed-end funds pay dividends? How do they pay dividends?

How do closed-end funds pay dividends?

There is only one kind of dividend for closed-end funds, that is, cash dividend, that is, part of the money earned by this fund is distributed to investors. To put it bluntly, it is to take out the money earned by investors investing in this fund and distribute it to investors. In addition to cash dividends, open-end funds can also choose to reinvest in dividends, that is, give away fund shares.

Dividend time of closed-end funds:

Closed-end funds do not have a fixed time for dividends, and different closed-end funds have different regulations on dividends, which are clearly stipulated in the fund contract. Dividends are usually paid twice a year, in the middle and at the end of the year. Because there is only one way to pay dividends, investors do not need to participate in any choice and operation.

The dividend period of closed-end funds cannot be divided by company. There is a hard condition that it must be profitable, which means that if the fund wants to pay dividends, it must be profitable. If the fund you buy loses money this year, it is impossible to pay dividends and it may not be profitable.

After reading the above introduction, I believe everyone can have a good understanding of how closed-end funds pay dividends. Dividends can play a role in enhancing the investment value of funds, and cash dividends of closed-end funds can play a role in pocketing some funds first.