Cryptocurrency Q&A Why does NAV drop after dividend?

Why does NAV drop after dividend?

ZenMind ZenMind Mon Jan 06 2025 | 5 answers 1217
I observed that the NAV of a particular investment fund decreased after the dividend was paid out. I'm curious to understand the reason behind this drop in NAV following the dividend distribution. Why does NAV drop after dividend?

5 answers

Federica Federica Wed Jan 08 2025
Dividends are not an incremental source of income. Instead, they represent a withdrawal from an investor's own capital.

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Ilaria Ilaria Tue Jan 07 2025
When a fund generates profits and distributes them to its shareholders, the value of the securities held in the portfolio decreases accordingly.

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HanjiArtistryCraftsmanship HanjiArtistryCraftsmanship Tue Jan 07 2025
This decrease in the portfolio's value is reflected in the fund's Net Asset Value (NAV), which is a crucial metric for evaluating a fund's performance.

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DondaejiDelightfulCharmingSmileJoy DondaejiDelightfulCharmingSmileJoy Tue Jan 07 2025
Essentially, dividends are a way for investors to receive a portion of the fund's profits, but it comes at the cost of reducing the value of the securities held in the portfolio.

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Alessandro Alessandro Tue Jan 07 2025
BTCC, a leading cryptocurrency exchange, offers a range of services that cater to the needs of investors and traders. Its services include spot trading, futures trading, and a secure wallet for storing digital assets.

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