The so-called fund dividend refers to the fund's distribution to investors after realizing the net investment income. The net income of the fund refers to the balance of the fund income after deducting the expenses that can be deducted from the fund income according to the relevant regulations, including dividends, bonuses, bond interest, price difference between buying and selling securities, bank deposit interest and other income. In addition, the fund dividend must meet the following conditions: 1, and the fund's current year's income can make up for the previous year's losses before it can be distributed; 2. After the distribution of fund income, the unit net value cannot be lower than the face value; 3. If the fund investment has a net loss in the current period, it cannot be distributed. In addition to meeting the requirements of relevant laws and regulations, fund dividends should also be paid in accordance with the income distribution clauses in the prospectus.

As a professional investment institution, the fund pursues long-term stable income, and simply paying attention to the operation in a certain period of time can not truly reflect the overall income of the fund. The high dividend ratio of the fund in a certain period of time does not mean that it has long-term sustainable dividend-paying ability. Generally speaking, to evaluate whether a fund is excellent or not, we should focus on the long term. In order to ensure the return on investment, fund managers will choose some cyclical investment varieties in the allocation of fund assets, which is also an important guarantee to ensure the stable return of funds. Therefore, we should be cautious about the short-term dividends of the fund.

2. What are cash dividends and dividend reinvestment?

There are two ways of fund dividend: cash dividend and dividend reinvestment. According to the Measures for the Operation and Management of Securities Investment Funds, if investors have not specified the dividend distribution method, the default income distribution method is cash dividend. You can also modify the dividend distribution method at the institution that purchased the fund before the equity registration date. Investors choose to pay dividends in cash, and the dividends will be transferred from the fund custody account to the bank deposit account designated by the investors on the implementation date. Dividend reinvestment is provided by the fund management company to investors, and the dividends obtained are directly reinvested in the services of the fund, which is equivalent to the distribution of income by listed companies in the form of stock dividends. If investors do not need cash for the time being and want to reinvest directly, they can choose the dividend reinvestment method. In this case, the dividend funds will be converted into corresponding fund shares and credited to your account, and the reinvestment fee is generally free.

In fact, the actual income of these two dividend methods is exactly the same. This part of the income is originally a part of the net value of the fund unit. Therefore, investors actually get the assets on the books, which is also the reason why the net value of fund shares fell on the dividend day (ex-dividend day).

Many investors will ask, do you want to buy funds before dividends or after dividends? Since the fund income distributed by dividends is a part of the fund's net value, the fund's net value will be relatively low after dividends. Is it more cost-effective to buy? Assuming that there is no market fluctuation between date of record and dividend reinvestment date, there is no difference in the assets owned by investors whether they buy before or after dividends. This is because, although the subscription before dividends can get dividends and be converted into fund shares, the subscription after dividends can buy more fund shares with the same subscription amount due to the decrease of the net value of the fund.

Third, reasonable dividends are the most important.

Another issue that investors are concerned about is whether a good fund should pay more dividends. In fact, in addition to dividend-paying funds, for other types of funds, more dividends are not necessarily a good thing, and reasonable dividends are the most important. Because the dividend of the fund is definitely profitable, the fund manager must throw out the stocks or bonds with income in his hand to pay dividends. If dividends are paid frequently, it will naturally lead to the short-term behavior of the fund in band operation. Moreover, the frequent entry and exit of funds in the market will increase stamp duty and commission accordingly, and these transaction costs will ultimately be borne by fund holders. For funds with long-term investment value, paying more dividends will make investors get more realistic income, but it will also make investors lose long-term investment opportunities.