A quick guide to how income distributions on ETFs and mutual funds work Apr 12th

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Q. I’m wondering if the reinvested income in mutual funds and ETFs paid only to existing investors who hold the units at the time of the distribution. If I sold my holding just before the distribution, am I out of luck? Or would the income still accrue to me, since I held the shares when that income was being earned?
– Steve
A. If you’re used to holding individual dividend-paying stocks, distributions from mutual funds and ETFs can be complex and confusing. But you’ll be happy to know that you’re not “out of luck” if you sell your mutual fund or ETF units before they pay out income to their investors.
Let’s break this down by imagining two investors: Sheila holds 50 individual dividend-paying stocks, while Harold owns a mutual fund that holds those same 50 stocks. Each of these companies is likely to have a slightly different dividend schedule, so Sheila will likely receive dividend income in dribs and drabs throughout the year.
Meanwhile, Harold’s mutual fund will receive all of the same dividend income, and on the same schedule as Sheila…

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