There are two main sources of profit from purchasing funds:
1. Capital gains generated by the price difference between trading funds;
2. The dividend generated by the fund dividend is expected to be annualized.
If you invest in an open-end fund, the capital gains come from the appreciation of the stocks or bonds invested by the fund and the increase in the net value of the fund unit due to dividends and interest; If you invest in closed-end funds, the capital gains come from the bid-ask spread caused by changes in market supply and demand. After deducting the relevant procedures when buying and selling funds, this price difference income is the expected annualized expected income of the final capital gain. The fund dividends obtained during the investment period, in addition to the expected annualized expected capital gains, will also increase the income of investors, which is also an integral part of the income from purchasing funds. Therefore, the total expected annualized rate of return on fund investment is equal to the expected annualized rate of return on capital gains plus the expected annualized rate of return on dividends.
Expected annualized expected return on capital is an easy-to-understand concept, so how many ways are there for fund dividends?
Fund dividend means that the fund distributes a part of the expected annualized expected income to fund investors in cash.
For open-end funds, most fund companies offer cash dividends and dividend reinvestment for investors to choose from. 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 dividend payment date; Dividend reinvestment is a service provided by fund management companies to investors. The dividend obtained is directly reinvested in the fund, which is equivalent to the distribution of expected annualized expected income by listed companies in the form of stock issuance. If investors don't need cash for the time being, they can choose dividend reinvestment. In this case, the dividend funds will be converted into corresponding fund shares and credited to the investor's account, and the reinvestment fee is generally exempted.
For closed-end funds, due to the fixed fund share, the expected annualized expected income distribution can only be in the form of cash, and so is ETF.
What is the default method of fund dividend?
According to Article 36 of the Measures for the Administration of the Operation of Securities Investment Funds, the default way of fund dividend is cash dividend.
Can open-end fund dividends be freely selected and changed?
There are two ways of dividends of open-end funds, namely cash dividends and dividend reinvestment, which investors can choose and change freely. If you want to change the dividend distribution method, you can go directly to the original purchase outlets, and investors holding multiple funds should set the dividend distribution method for each fund separately.
What is the basis of fund dividends?
Generally speaking, fund dividends should meet the following principles: 1. The expected annualized expected income of the fund in the current period can only be distributed after making up the previous losses; 2. The net value of each fund share after the expected annualized expected income distribution of the fund cannot be lower than the face value; 3. If the fund loses money in the current period, the expected annualized expected return will not be distributed. Some funds also stipulate in advance in the prospectus the distribution method of the expected annualized expected return of the fund, such as the minimum and maximum distribution times in a year, or pay dividends when the distributable expected annualized expected return reaches a certain standard.
What is the expected annualized expected income distribution principle of cash appreciation funds?
The distribution principle of expected annualized expected income of cash appreciation fund is: the fund manager calculates the expected annualized expected income of the account for investors based on the net expected annualized expected income of the unit fund on that day, and counts it into the current cumulative expected annualized expected income of his account. Every month, the current cumulative expected annualized expected return in the investor's account will be carried forward to the fund share and included in the fund share in the investor's account.
That is, the cash appreciation fund calculates the expected annualized expected return every day, and accumulates the expected annualized expected return in the investor's account into the sub-account of "Expected annualized expected return is not carried forward". As a reinvested fund share, the expected annualized expected return that has not been carried forward enjoys the expected annualized expected return, which is the concept of daily compound interest. At the end of each month, the expected annualized expected income accumulated in the current month will be carried forward to the fund share and included in the account fund balance. Among them, it is only an action to convert the expected annualized income that has not been carried forward into shares, which does not affect the fund held by investors to enjoy the expected annualized expected income of the day.
The way the fund pays dividends is roughly the same. The source of fund profits is the expected annualized expected return of capital gains plus the expected annualized expected return of dividends. I wish you all a lot of expected annualized returns from investment funds.
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