What is Equalisation?
Monday, 14 May 2007
When a fund is purchased, it may be purchased between payment dates of the underlying investments. During this period the price of the fund reflects any increase in Net Asset Value (NAV) of the fund arising from the dividend building up in this period. Therefore the fund is purchased at an inflated price. In order to compensate you for this inflated price, the fund manager will return some capital to you in the form of an equalisation payment on the same date as your first dividend payment. This return of capital is then deducted from the amount you originally invested to reflect the true cost of the purchase.
Categories: FAQs
posted by Murray Round Wealth Management @ 11:21,
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Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
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