Managed Funds Unit price reflection

Just to clarify a few of the responsese by Rod_WA:

Yes, the unit price on any given day represents the total net asset value of the fund, including any undistributed profits to date. At distribution time, when those funds are paid out (or used to buy additional units), the net asset value of the fund will drop by the corresponding amount, hence the unit price drops.

All unit trusts operate the same way - unit price includes undistributed income and realised and unrealised capital gains.

A unit trust (managed fund) must distribute all net profits to unit holders at the end of the financial year. Up until that point, distributions are discretionary (eg, the fund manager can hold back some profit to be paid back later in the financial year - but no later than the end of the year ... as an example, Navra do this to smooth out the income distribution throughout the year).

For the year, this is purely the sum of all net income (after costs and fees are taken out) earned by the fund plus net realised capital gains. For interim distributions, the amount of distribution may be somewhat arbitrary - this is why you sometimes see the first three quarterly distributions with round numbers (eg 3.2c/unit) and then the final distribution for the year with a lot more accuracy (eg 3.2145c/unit).

 

That's a good question - I think the term "managed fund" generally refers to unit trusts ... but if you use the term "managed investment scheme", that generally has broader implications in relation to the structure used.

I'm not sure how hedge funds are structured, and I'm sure there are other specialty funds which use a variation on the standard unit trust structure - but I don't know what they are or how they work.