Distribution reinvestment

Putting payouts straight back into the same fund

In detail

Reinvestment takes the distribution and buys more of the same fund instead of paying cash. Your unit count grows, so the next distribution is calculated on more units, and the effect compounds. The payout option hands you cash instead, at the cost of a principal that no longer grows. The same fund usually offers both as separate share classes.

Example

Reinvesting a $10,000 distribution simply adds units at that value.

Related terms

Distribution Compounding Net asset value

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For learning, not investment advice. Decisions are your own.