Understanding MUTUAL FUND REINVESTMENT Units

Reinvestment Units (RIU):

Reinvestment is using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. In terms of mutual funds, it is the reinvestment of distributions and dividends to purchase additional units of that fund. Cash is automatically used by the fund’s administrators to buy more fund units on behalf of the investors and transfer them to individual investors’ accounts. Fund holders realize a capital gain upon the sale of their units in the fund.

Rules on Dividend Declaration of Mutual Funds of Bangladesh:

According to the Mutual Fund Rules in 2001, minimum 70% income of the Fund will be distributed as cash dividend or reinvestment or both cash dividend and reinvestment at the end of each accounting year. The Fund shall create a dividend equalization reserve fund to ensure consistency in dividend. The dividend will be distributed within 45 days from the date of declaration.

 

Calculation of RIU:

RIU Calculation – The Whole Process :

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