How could there be a capital gain distribution if the net asset value of my fund has gone down during the year?
A. It’s important for shareholders to remember that the capital gain distribution reflects the gains recognized by the trading activity of the fund manager during the year, which in turn are based on when and at what price the manager originally purchased the security. Therefore, even though the value of the securities in a fund’s portfolio may currently be down, and as a result the fund’s share price as well, the sale of those securities by the fund’s manager can still result in capital gains which are distributed to shareholders, particularly if they have been held in the portfolio for a long time.
Related Questions
- Why does Thrivent Financial provide capital gain distribution information for Thrivent Financial Mutual Funds prior to year end?
- How could there be a capital gain distribution if the net asset value of my fund has gone down during the year?
- Why does my Fund’s net asset value (NAV) drop when distributions are paid?
