What does an equity mutual fund do with the dividends it receives from the companies in its portfolio? Do investors benefit from this in any way?
-Mohan SharmaA mutual fund has three primary sources of income. The first one is the change in prices; when the price of the stocks or bonds it has invested in go up or down, they get reflected in the fund’s NAV. The other sources of income are the dividends it receives from its stock investments and the interests it receives from its bond investments. All of these benefit the investor and get reflected in the NAV on a day-to-day basis.
This article was originally published on May 07, 2012.
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