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IMHO, all sturm und drang signifying little. Your dividend fund pays you last as well - since you have to your own costs first (here, trading costs). You're only getting net.
And that's all this whole thread at M* is saying (aside from what a company's dividend represents) - that mutual funds have costs and you get net.
Funds garner cash - from dividends, from interest, from realized net capital gains. That cash, less the expenses incurred in acquiring said cash (such as trading commissions, office expenses, salaries, etc.) is distributed to shareholders. A primary difference between investment companies (mutual funds) and corporations with respect to dividends is that funds are required to distribute substantially all of their net profits; corporations typically retain some profits.
Mutual funds are a model of transparency regarding dividends in comparison with the underlying companies that can do almost anything they want, and bury data legally (see Enron). cf. Dodge v. Ford for the exception that proves the rule - that in exceptional circumstances, coroporations can be compelled to distribute dividends.
While true it's my salary, office expenses, etc. that are getting paid to me and not to the mutual fund company. We each have trading costs albeit theirs may be lower. Over time all of it adds up. What is it that Vanguard is noted for? Oh yeah, holding down expenses.
Comments
And that's all this whole thread at M* is saying (aside from what a company's dividend represents) - that mutual funds have costs and you get net.
Funds garner cash - from dividends, from interest, from realized net capital gains. That cash, less the expenses incurred in acquiring said cash (such as trading commissions, office expenses, salaries, etc.) is distributed to shareholders. A primary difference between investment companies (mutual funds) and corporations with respect to dividends is that funds are required to distribute substantially all of their net profits; corporations typically retain some profits.
Mutual funds are a model of transparency regarding dividends in comparison with the underlying companies that can do almost anything they want, and bury data legally (see Enron). cf. Dodge v. Ford for the exception that proves the rule - that in exceptional circumstances, coroporations can be compelled to distribute dividends.