MP, At least half of the people who own Chile Fund use DRIPs, so they get about half of the distribution back. The NAV will decline by the amount of the distribution, which will reduce the assets under management. As a shareholder, we get to pay taxes on that distribution. Since I have a loss in the shares, I will sell them after the distribution and take a tax loss to offset the tax bite from the distributed gain, leaving me out of it for a month.
But, what we have is a management that very wisely sold a lot of shares prior to this decline, which makes me like the cut of their jib. And I will repurchase the shares when the Wash Sale is ex post facto.
Net, net, distributions make no difference at all in the performance of a fund. It is basically just taking money from one pocket and putting it in another, with tax consequences. In an IRA, it is basically a non-event. If you reinvest, your position will remain undiluted. However, most investors are not sophisticated. They see this distribution as a "yield," and high yields always sell. There may be a run to buy CH prior to ex-dividend.
MB |
