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Why should the fund pay dividends?
I believe that investors and friends have heard more or less that it is possible to get dividends by buying stocks. In fact, buying a fund is the same. So, why should the fund pay dividends? How to choose the way of fund dividend? We have also prepared relevant contents for you here for your reference.

Why should the fund pay dividends?

In fact, the fund dividend is that the fund manager forces to sell some positions and then returns the money to everyone. The main reasons for fund dividends are as follows:

1, reducing risk. Fund managers can control the fund size through dividends, reducing the difficulty and risk of fund management. For example, some funds that mainly invest in stocks will reduce their stock positions through dividends when they are not optimistic about the market outlook, thus reducing the overall investment risk of the funds and keeping the fruits of victory.

2. Reduce the net value of the fund to attract more investors. Dividends will reduce the net value of the fund. If the net value of the fund is too high, it may make investors daunting, but appropriately reducing the net value of the fund can attract more investors. Moreover, the fund dividend can not be divided if the fund manager wants to, or it should be based on a certain fund performance, indicating that the fund can make money and win the trust of more investors through dividends.

3. Ensure the return of investors. Fund dividends allow investors to enjoy part of the real-time income of the fund. Dividends are a good opportunity to take profits. Dividends are paid directly to the investor's account, and there is no handling fee. The shares held by investors have not decreased, but profits have been realized.

4. The performance of the fund is good. In order to show their good performance level, funds with good performance will choose dividends to repay investors' trust and lay a good market reputation. From this perspective, dividends are a way to show the strength of funds.

What kind of fund dividend is better?

There are two main ways of fund dividend: cash dividend and dividend reinvestment. There is no absolutely better way. Investors can comprehensively consider the following points when choosing:

1, through the investment period selection. For the short-term investment of the fund, the cash dividend method is more suitable. On the one hand, you can save the cash you get, on the other hand, you can choose to continue investing in other varieties. For the long-term investment of funds, especially when the invested funds are good at long-term investment, it is more appropriate to choose dividend reinvestment, because it can play an effect similar to fund compound interest.

2. Choose by judging the market trend. If the current market is at a low level and the future prospects are optimistic, it is appropriate to choose dividend reinvestment. In this way, the fund share held by the company can be increased without charging subscription fees, and more income can be obtained after the market begins to improve. On the contrary, when the market is overheated, more consideration should be given to cash dividends.

3. Choose according to whether it is in the closed period. For closed-end funds, they cannot be redeemed during the closed period. If you want to cash in part of the proceeds in advance, you can choose cash dividends.