It's rare, but when a fund does not have an expected distribution means the ETF or managed fund expects that it will not return income (generated by the fund) or excess capital gains back to you, the investor.
On the ASX, most ETFs/funds will offer either a monthly, quarterly, half-yearly or yearly distribution, either as cash or as new units in the ETF/fund, as part of a distribution reinvestment plan or DRP.
Most ETFs/funds on the ASX will offer their investors a 'full or partial' DRP — giving them the option to take none, some or all of their distributions/dividends as new units in the fund.
After a full or partial DRP, the next most common type of DRP option is when a fund offers no DRP at all. This would mean all distributions are automatically paid back to you, the investor, as cash/direct deposit, regardless of whether you wanted to reinvest the distributions.
There is no right or wrong answer for what type of DRP is best. However, for flexibility, we’re seeing more ETFs/funds offer their investors full flexibility by opting to go with a ‘full or partial’ DRP. Most large share registries offer this functionality for fund managers and their investors.
The ETF/Fund’s Product Disclosure Statement (PDS) should tell you which DRP options are available to you and how it works.
However, it’s easy to select your DRP option by following these steps:
Here’s a list of the most popular share registries:
This brilliant (and free!) report is issued by Best ETFs Australia, a division of The Rask Group Pty Ltd. It is not a recommendation.
Speak to a financial professional before relying on this information and please read our Financial Services Guide (FSG).
We care about your experience, please let us know if you have any suggestions to improve our site.