If a fund performs well, more and more people will buy it. When there are more and more investment users, the scale of the fund will expand, the net value of the fund will be higher and higher, and it will be difficult for fund managers to operate. At this point, the fund company will use the net value conversion method to extract part of the fund's profits and return them to investors.
In other words, fund dividends are not extra income. Dividends are actually part of the profits that institutions get from funds and return them to investors. When the fund pays dividends, the net value of the fund will drop, and trading is prohibited on the day of dividends. What's more, some companies' fund performance is outstanding and profits exceed expectations, and fund companies will give back some of the profitable money to customers.
Extended data
Conditions to Meet for Dividends of Open-end Funds
1. If there is a loss in the annual income of the fund, then if the previous loss can be made up by the current profit, then dividends can be paid.
2. If the fund loses money in the current period, it cannot be distributed.
3. After the fund distributes dividends, the net unit value shall not be lower than the face value.