In the past two years, there have been a large number of explosion bases, and even some old funds have soared in scale, but those with good performance have easily reached 10 billion.
Once the scale increases dramatically, it is a great pressure for fund managers.
It can even be said that scale is the killer of performance.
Therefore, once the fund scale is too large, the fund manager can't buy such a high-yield cow base except for the purchase restriction. ), you can also reduce the scale through dividends.
It is a better choice for fund managers and citizens to reduce the scale and let fund managers choose stocks within their own ability circle so as to obtain higher returns.
(2) It is safe to leave the bag behind and reduce the investment risk of the people.
After making money, it is a responsible performance of the fund manager to give the money to the basic people and let this part of the income fall into the bag.
Especially those funds that stipulate the scope and proportion of investment.
Usually, the contract of equity funds will stipulate that more than 80%-90% of assets will be invested in stocks, which means that it is difficult for fund managers to avoid the risk of flash collapse in the late bull market by reducing their positions.
At this time, the best way to deal with it is to sell some stocks that are already profitable and now risky, and give the money to the people, so that the income can be saved.
Like the plunge in the last two days, if the fund pays dividends at the previous high point, which is equivalent to helping the people realize income, then the plunge in recent days will not be so heavy.
(3) It is beneficial to the marketing of fund companies.
Although a fund's publicity materials have a good history of dividends, it is beneficial for the company to promote this fund.
However, the promotion is to collect management fees in order to expand the scale, and the behavior of dividends reduces the scale and management fee income, which has the opposite effect on the income of fund companies.
So some people say that the dividend behavior is made by fund companies in order to use marketing. I don't quite agree with this. It sounds a bit excessive to speculate on the behavior of fund companies.
It can only be said that it is really beneficial to marketing, but the significance of dividends lies in the above (1)(2), not for the benefit of fund companies.
(4) In order to reduce the tracking error
There is also a special case, that is, index funds may pay dividends to reduce tracking errors.
This kind of dividend is not necessarily that the fund makes money, but more likely that the shares bought by the fund pay dividends.
As a passive fund, it is very important for index funds to copy the stocks of the benchmark index as much as possible and control the tracking error in a small range.
If the stocks in the benchmark index pay dividends, the money will be allocated to the account of the index fund, which is not enough for the fund to buy a basket of stocks in proportion to the index. At this time, the money can be distributed to the citizens.