Not Only Stocks, Mutual Funds Can Also Pay Dividends!

Jakarta, Armfalcon.com – Of course you often hear the word dividend when discussing matters related to stock investment. But make no mistake, mutual funds can also distribute dividends to their investors.

Based on its definition, dividends are part of the profit or income of a company that is distributed to investors.

Reflecting on equity funds, mutual fund investment managers certainly receive dividends from the stocks that enter their portfolio. The dividends can be reinvested which will have an impact on increasing the net asset value per unit of a mutual fund.

However, there are several mutual funds that also distribute dividends like stocks, and the dividends are immediately received by investors.

However, the form of dividends given is not always in cash, because there are also those in the form of additional units of participation. Most common mutual funds that distribute dividends are fixed income mutual funds.

However, be aware that there will be several effects that arise as a result of this dividend distribution process, especially if not a decrease in the value of net assets per unit of participation.

Why are mutual fund values ​​going down?

The price of the net asset value per unit of participation (NAV per UP) of the mutual fund can decrease when the dividend distribution takes place. Maybe you will be confused, why is this happening?

Is it better for investment managers to just reinvest rather than distribute dividends so that this doesn’t happen?

The reason for the decrease in the NAV per UP is actually because the dividends that are distributed are none other than the NAV of the mutual funds. When at some point in the future the value of the assets in the mutual fund portfolio increases, the NAV price per UP of the mutual fund that has just distributed dividends will also increase.

Even though the NAV value has decreased, you actually still benefit because you get a new investment unit for free. As a result, the value of your investment will increase if you recalculate.

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