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Distribution Rate Formula:
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Distribution Rate (DR) is a financial metric that measures the percentage of a fund's net asset value that is distributed to investors as income. It's commonly used to evaluate the income-generating potential of investment funds, particularly mutual funds and ETFs.
The calculator uses the Distribution Rate formula:
Where:
Explanation: The formula calculates what percentage of the fund's net asset value is being distributed to investors as income.
Details: Distribution Rate is a key metric for income-focused investors as it helps compare the income-generating potential of different investment funds. A higher distribution rate indicates a higher income return relative to the fund's value.
Tips: Enter the distribution amount in dollars, the net asset value in dollars. Both values must be positive numbers greater than zero.
Q1: What is considered a good distribution rate?
A: A "good" distribution rate depends on the investor's goals and the fund type. Generally, 3-6% is common for many income funds, but rates can vary significantly.
Q2: How often is distribution rate calculated?
A: Distribution rates are typically calculated monthly or quarterly, depending on the fund's distribution schedule.
Q3: Does a higher distribution rate always mean better?
A: Not necessarily. Very high distribution rates might be unsustainable or could indicate a declining NAV. Investors should consider both the rate and its sustainability.
Q4: How does distribution rate differ from dividend yield?
A: Distribution rate includes all types of distributions (dividends, interest, capital gains), while dividend yield only considers dividend payments.
Q5: Can distribution rate be negative?
A: No, distribution rate cannot be negative as both distribution amount and NAV are positive values in the calculation.