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Frequently Asked Questions

What Is Fund Distribution?

There are several descriptions for ‘fund distribution’ within the world of finance; however, generally speaking, the term refers to the payment going from an individual security, account or fund to an investor. Traditionally, distribution funds have been thought of as ‘steady’, being a reliable part of one’s investment portfolio.

Another definition of fund distribution is when a company or mutual fund pays its shareholders in cash, stock or by another form of pay-out. No matter the exact type of distribution, it is typical for the payment to be paid directly to the beneficiary, by cheque or electronically.

What Is the Aim of a Distribution Fund?
Fund distribution aims to deliver an income as well as steady capital returns, which is made possible thanks to the fund’s strategic blend of bond, equity and other asset classes. One of the most common distributions is a retirement account distribution, which is required when the individual account holder reaches the required age, and fund distribution is becoming increasingly popular in the post credit-crunch era.
What are the Different Types of Fund Distribution?
There are a number of different methods of fund distribution, including distributions from mutual funds, stock and bond distributions, investment trust distributions and retirement account distributions.

Distributions from mutual funds describes the periodic distribution of capital gains and dividends – or income from the interest generated by the fund – which is allocated to each of the individual investors. One of the most common types of distribution from mutual funds is a ‘net capital gains distribution’, which is calculated from the profits from the sale of holdings held by a mutual fund.

Stock and bond distributions are based on the payment of interest, dividend or principal to the shareholders/bondholders. These payments are sent by the issuer of the security, and the payments are made regularly. Investment trust distributions are the payments to investors from the income that is generated from an investment trust.

Rtirement account distributions are available in two types: those made before the age of 59 ½ , which are subject to a penalty and income tax, and those that are made after the age of 59 ½ , which do not incur a penalty.