At present, there are generally two ways for fund dividends. The first is cash dividend. Each fund is distributed by multiplying the fund shares held by investors. The net value after dividend is actually cash sent to investors. Although this reduces the investment cost, the total amount of funds will not change.
The other is dividend reinvestment, which converts the cash from dividends into fund shares with net ex-dividend date and sends them to investors, so as to increase the fund shares held by investors. However, the net value of the fund will also decline, but the market value in the fund account will remain unchanged.
Therefore, whether it is cash dividend or dividend reinvestment, in short, after the fund pays dividends, the net value will decrease accordingly.
People can get a certain dividend after buying a fund, which is actually part of the income generated by people buying a fund.
1. When does the fund usually pay dividends?
According to the relevant regulations, the dividends of open-end funds need to meet the following three conditions: First, the income of the fund in the current year can make up for the losses in the previous year before it can be distributed; Second, after the distribution of fund income, the unit net value cannot be lower than the face value; Third, if the fund investment has a net loss in the current period, it cannot be distributed.
If these conditions are met, the fund will pay dividends in the current year. If the prospectus does not specify the specific dividend conditions, the timing and frequency of dividends are completely determined by the fund company. Some funds only pay dividends frequently, such as Huaxia return, which is characterized by more dividends; Some funds pay dividends irregularly, even if they pay dividends very little.
If people buy open-end funds, generally speaking, there will be provisions in the contract. When people buy open-end funds, both parties will sign a contract, which will explain the maximum number of dividends and the minimum proportion. If people buy closed-end funds, they will get dividends at least once a year. As for whether there will be a decline in the net value after the fund pays dividends, I can tell you very clearly here that under normal circumstances, there will be a decline in the net value after the fund pays dividends, which is very normal.