Under normal circumstances, companies that choose fund dividends are fund companies with better performance. Companies whose stock market index is too high or whose net worth is too high can choose the fund to pay dividends. In fact, most companies can choose different dividend distribution methods according to different market conditions. So, what are the ways of fund dividends?

What are the ways of fund dividends?

There are two ways of fund dividend: cash dividend and dividend reinvestment. Cash dividend method is a dividend method in which fund companies distribute part of fund income to fund investors in cash. Dividend reinvestment is a way for fund investors to reinvest the cash dividends obtained from dividends in the fund to obtain fund shares.

Which method is the best for fund dividends?

Mainly depends on which method is more suitable for investors. Direct cash dividends are exempt from personal income tax. Suitable for customers who are not optimistic about the market outlook or have short-term cash use needs. Dividend reinvestment is to convert cash dividends into fund shares and continue to hold funds. Suitable for value investors who have no cash demand in the short term and are optimistic about the market outlook during the adjustment period.

However, the fund dividend is not as much as possible. Fund dividends themselves do not generate incremental assets, but are part of the net value of funds held. Fund dividends can only show that the fund's income in that year is positive. If it is excessive dividend in the rising market, it will not be conducive to the long-term performance of the fund. Moreover, fund dividends are the realization of income, and open-end funds can also be realized by redeeming some shares.