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Mutual fund did not distribute dividends?
Old 01-04-2016, 08:32 AM   #1
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Mutual fund did not distribute dividends?

Noticed that one of my equity mutual funds in my taxable account did not distribute a dividend in June. Dividends for this fund are normally distributed on a quarterly basis. Dividends were distributed in March, Sept. , and Dec. When I called customer service I was told it is at the discretion of the fund manager whether dividends are distributed or not.

I am a little confused by this as this particular fund has over 500 stocks in it. So what happens to those dividends that maybe a portion of the companies did distribute a quarterly dividend in June? This is a tax managed fund with Vanguard. Does the fund manager reinvest the dividends? If so I should have still received them as additional shares....No? A little confused.

And in March there was a dividend payout but less than $100 whereas in Sept. it was $3200?
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Old 01-04-2016, 08:44 AM   #2
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I'm not sure I understand the annoyance. Dividends are paid by companies and companies do not always pay their dividends. Furthermore, a fund manager may have used the dividends to pay expenses. This is a whole lot better than both (a) paying taxable dividends to shareholders and/or (b) selling shares to pay expenses.

I hate dividends because they cause my taxes to go up. I would rather not get them. I would rather that the NAV of the fund shares went up instead. Then I can choose when I have to pay taxes or not.

So for equity funds, I do not plan my budget on dividends. If I need money, then I simply sell some shares to get money.
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Old 01-04-2016, 09:50 AM   #3
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Ticker? (and I agree with LOL!)

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Old 01-04-2016, 10:36 AM   #4
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Sounds like a call to the fund would be in order.
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Old 01-04-2016, 11:25 PM   #5
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Not only is the decision to distribute dividends the right of the fund, but even allowing redemptions is the right of the fund.
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Old 01-04-2016, 11:32 PM   #6
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What is the fund name, ticker symbol ?

Lots of us also have Vanguard funds, etf's and could use the heads up.
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Old 01-05-2016, 12:42 AM   #7
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Not only is the decision to distribute dividends the right of the fund, but even allowing redemptions is the right of the fund.

Actually not quite right.... they are supposed to distribute dividends and cap gains by the end of each year....

Maybe there is something that says otherwise, but that is what I have heard for many years....
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Old 01-05-2016, 04:28 AM   #8
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As long as the fund did not report a distribution that quarter you are fine.

Don't expect even distributions - there are a lot of factors.

I once had a fund report a distribution that I did not receive in my account. Called in, got it fixed. They couldn't explain why I didn't receive it already. Never happened again.
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Old 01-05-2016, 06:54 AM   #9
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And I once had a fund pay a distribution that was too big. I spent the money and they still took it out of my account making it go negative.
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Old 01-05-2016, 07:01 AM   #10
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And I once had a fund pay a distribution that was too big. .....
That's called incompetence.
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Old 01-05-2016, 07:41 AM   #11
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I hate dividends because they cause my taxes to go up. I would rather not get them. .
Send them to me and I'll pay the taxes!
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Old 01-05-2016, 10:03 AM   #12
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A few years ago, one of my bond mutual funds had a spike in its December dividends. This caused me grief because by the time I found out about it, I could not make an estimated state income tax payment by 12/31 to deduct it on my federal return. Also, I had already made my federal estimated tax payment (even though I could have waited until 1/15) so I ended up with a big tax bill in April.


This spike, I later learned, was not evenly distributed through the month but instead on a single day in the middle of the month. In the few years after the spike, I was able to learn its amount per share when it happened (with some difficulty) and respond accordingly. Then, it disappeared a few years later. Another bond mutual fund had a spike in its December distribution last month but it is in my IRA so I'm not too concerned if it is like the spike I saw in the other fund.
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Old 01-05-2016, 01:27 PM   #13
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Originally Posted by MrLoco View Post

I am a little confused by this as this particular fund has over 500 stocks in it. So what happens to those dividends that maybe a portion of the companies did distribute a quarterly dividend in June? This is a tax managed fund with Vanguard. Does the fund manager reinvest the dividends? If so I should have still received them as additional shares....No? A little confused.

And in March there was a dividend payout but less than $100 whereas in Sept. it was $3200?
As noted by others, there are rules for distributions. My understanding is that substantially all of the dividends (minus expenses) and capital gains must be distributed by the end of the year, but the timing would be up to the manager. Was the September distribution possibly capital gains as well?

If a fund holds on to dividends for a while that will increase the value of each share, not the number of shares. Similarly, when a fund makes a distribution its price per share will decrease. You always have the same total value (share + dividend), subject to market variations, however in one case the fund has the dividend and in the other you have the dividend.
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Old 01-06-2016, 12:39 AM   #14
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Actually not quite right.... they are supposed to distribute dividends and cap gains by the end of each year....

Maybe there is something that says otherwise, but that is what I have heard for many years....
Well I always heard you could redeem your mutual funds whenever you wanted, until the Wall Street Journal reported: 2015 3rd Ave mutual fund stopped redeeming funds.

How the Third Avenue fund melted down
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