Managed Funds Apply Before/After a fund's Distribution???

Discussion in 'Shares & Funds' started by Lam Thieu, 20th Sep, 2007.

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  1. Lam Thieu

    Lam Thieu Well-Known Member

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    24th Jan, 2017
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    Location:
    Melbourne, Australia
    Hello all,

    Most funds which have quarterly distributions will be making them at the end of September.

    If i'm a new investor and wanting to apply, are there any dangers in applying to the fund just before or just after the distribution?

    Thanks
     
    Lam Thieu, 20th Sep, 2007
    #1
  2. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
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    Location:
    Sydney
    If you apply just before the distribution, you will be receiving your capital back as income from the distribution - you will then pay tax on this and will have an unrealised capital loss on your investment.

    This can have benefits if you are attempting to do some form of debt recycling, or if you have realised capital gains you want to offset by realising a capital loss soon after distribution, but otherwise, it is generally less tax effective to invest just before the distribution.

    Generally I'd suggest waiting until just after the distribution (of course, if the unit price goes up 10% in the meantime, you'll be kicking yourself !! :rolleyes: ).
     
    Simon Hampel, 20th Sep, 2007
    #2