A yearly or annual distribution means the ETF or managed fund expects to return income (generated by the fund) or excess capital gains back to you, the investor, once per year.
On the ASX, some ETFs/funds will offer monthly, quarterly, half-yearly or yearly distributions as new units in the ETF/fund, as part of a distribution reinvestment plan or DRP.
How can I easily reinvest dividends/distributions?
Most ETFs/funds on the ASX will offer their investors a ‘full or partial‘ DRP — giving them the option to take none, some or all of their distributions/dividends as new units in the fund.
After a full or partial DRP, the next most common type of DRP option is when a fund offers no DRP at all. This would mean all distributions are automatically paid back to you, the investor, as cash/direct deposit, regardless of whether you wanted to reinvest the distributions.
What type of DRP is best?
There is no right or wrong answer for what type of DRP is best. However, for flexibility, we’re seeing more ETFs/funds offer their investors full flexibility by opting to go with a ‘full or partial’ DRP. Most large share registries offer this functionality for fund managers and their investors.
How do I select a DRP option for my ETF or fund?
The ETF/Fund’s Product Disclosure Statement (PDS) should tell you which DRP options are available to you and how it works.
However, it’s easy to select your DRP option by following these steps:
- Search for the fund/ETF in the Best ETFs Australia list of ETFs
- Navigate to find the ‘Registry’
- Using your investor information, log-in to the registry’s website
- Find the option to set your preferences in the DRP (e.g. ‘full DRP’ or ‘partial DRP’)
Here’s a list of the most popular share registries:
