As we have reached the end of another financial year, we wanted to send a reminder about income distributions.
At the end of the financial year, fund managers calculate realised profits (realised capital gains, dividends and interest received) that the fund has made during the financial year and these are required to be paid to investors in the form of an income distribution, which is usually paid during July.
The unit price of the fund is adjusted as at 1 July to reflect the distribution that is paid later in the month. During this interim period between 1 July and the date that any distributions are paid to your portfolio cash account (typically mid-late July), it can look as though your portfolio balance has reduced. In addition, the fund managers can be delayed in updating their unit prices until such time as they’ve calculated and paid income distributions, and as such your portfolio balance may not be updated as frequently during this period. However, the amount your balance reduces by, is approximately the total amount of the distributions which are due to be received into your cash account during July.
This income distribution acts in a similar way to a listed company that pays dividends.
We occasionally receive questions about this during July, so we thought this note would benefit any investors curious as to their account balance activity in July.
We have tried to display this in a picture below.
Please contact us if you have any questions or would like to discuss.
As we have reached the end of another financial year, we wanted to send a reminder about income distributions.
The Australian equity market (as measured by the S&P/ASX 200) started the year off much like the previous finished, although most of the steam had been taken out of the rally with January producing a solid +1.20% return. February was much more muted with the uncertainty of an imminent reporting season hanging over the market however with better-than-expected results, coupled with softer-than-expected domestic inflation data, March provided some highlights as Australian shares hit new record highs. The quarter ended on a high with March producing +3.27% closing the quarter off with an attractive +5.53%.
The Australian equity market (as measured by the S&P/ASX 200) started the December quarter the same way the September quarter ended, with a sea of red as stubbornly high inflation and rising bond yields placed pressure on current and forward-looking company earnings. November and December came roaring back as positive inflation data (i.e. lower inflation numbers) and sudden falls in bond yields created an air of optimism and the potential end of central bank tightening. The share market closed at near record highs.