NEill asked in Business & FinanceInvesting · 1 month ago

index funds, how are dividends reflected in prices?

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  • Anonymous
    1 month ago

    Are you asking about the stocks in the fund paying a dividend or are you asking about the fund paying a dividend?   Two different things.

    If the stocks within a mutual fund pay a dividend, the dividend is received by the mutual fund and is reinvested according to the index's allocation.

    If the fund pays a dividend to shareholders, the share price of the fund is reduced by the amount of the dividend.   Fortunately stock index funds like S&P 500 are pretty dang tax efficient. 

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  • Anonymous
    1 month ago

    If the price is $10 and it pays a 10 cent dividend, the price decreases by 10 cents. There is no gain or loss. You can take dividends in cash or reinvest.

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