The Lemon Fool

I am thinking of buying the Royal London Short Term Money Market Y Inc fund as it has a good yield of 5.25%. However, I notice the dividend is payed semi-annually (no idea when?). If I sell my fund before the dividend date or ex-dividend date will I still get the income? If I lose the income then presumably I would be better off buying into the accumulation fund as that accumulates on a daily basis.

KeepItSharp wrote:I am thinking of buying the Royal London Short Term Money Market Y Inc fund as it has a good yield of 5.25%. However, I notice the dividend is payed semi-annually (no idea when?). If I sell my fund before the dividend date or ex-dividend date will I still get the income? If I lose the income then presumably I would be better off buying into the accumulation fund as that accumulates on a daily basis.

If it works like a normal fund, the income rolls from the last XD date, so if you sell before XD the income is included in the unit price. If you sell XD, the price will have fallen by about the amount of income, which you will receive on the payment date. Either way you will not lose out.

TJH

KeepItSharp wrote:I am thinking of buying the Royal London Short Term Money Market Y Inc fund as it has a good yield of 5.25%. However, I notice the dividend is payed semi-annually (no idea when?). If I sell my fund before the dividend date or ex-dividend date will I still get the income? If I lose the income then presumably I would be better off buying into the accumulation fund as that accumulates on a daily basis.

The historical yield is not the return that you will actually receive. If you sell before the ex-dividend date, you get a capital gain. Dividends are paid on 30 June and 31 December. The accumulation version does not reinvest income on a daily basis. It reinvests when the dividend is paid for the distributing version. You still have to pay income tax on the dividends with the accumulating version, but you can add them to your capital gains base cost. It is easier to work out the tax for the distributing version, but you then have to take account of Equalisation. Here is an article about the Vanguard fund:

https://www.vanguardinvestor.co.uk/arti ... arket-fund

"It is easier to work out the tax for the distributing version, but you then have to take account of Equalisation. "

Thanks for that. The equalisation is another thing I hadn't considered but it makes sense that it has to be done.

https://www.hl.co.uk/funds/fund-discoun ... s-y-income


Ex Dividend 1st May 2024 Pay 30th June 2024

Ex Dividend 1st Nov 2024 Pay 31st Dec 2024