Question:

What does reinvest LT Cap Gain mean?

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What does reinvest LT Cap Gain mean?

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  1. Mutual fund investments generate LONG TERM CAPITAL GAINS.  This means that the fund have sold positions (some of the stock they are holding) and such sales have generated profits.  Some of these profits are long term, so there were long term capital gains.

    A mutual fund must distribute dividends, interest and profits/losses from their holders to their shareholders.

    So the fund distributes Long Term Capital gains (profts) to their share holders,  most fund shareholders want any dividends, interest or gains to be re-invested into the fund, rather than receive credit or checks for such.


  2. When a mutual fund sells a holding that makes it a long-term profit (meaning it held the holding for more than 1 year), it accumulates those profits and is required to pay those out to shareholders.  You can either get it sent to you, or have it reinvested.  To have it reinvested means it will be used to purchase more shares of that mutual fund.

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