With the end of the financial year fast approaching, there are a few important things to note about our Funds and distributions. The key points are below, or you can learn more in our FAQs.
Distributions for all the Allan Gray Australia Funds will be made on 30 June, with payments expected to be made on or around Wednesday 15 July 2020. The Allan Gray Australia Funds will reflect their new unit price from 1 July 2020.
If your clients hold units in the Allan Gray Australia Funds please check their distribution instruction and let us know if you would like to change it as soon as possible. We require written notice on or before 24 June 2020 to change a distribution instruction to meet the 30 June 2020 deadline.
Why does the unit price fall after a distribution?
If, like us, you receive a number of calls from clients each year who are concerned the value of their investment has reduced after the distribution is paid, the graph below may help you explain. In our experience, what most investors haven’t realised is that although it is true that the unit value reduces, it’s important to remember that this is because the investor has been paid that money so their total wealth remains the same.
This is illustrated in the chart below. When the distribution is paid, the unit price reduces by the same amount.
Source: Allan Gray. For illustrative purposes we have assumed the unit price increases at a constant rate. This is unrealistic, as investment performance doesn’t follow a straight line. We have also ignored any tax implications for simplicity.