The effect created by the required (SEC rule) disbursement of dividends by unit trust exchange-traded funds which prevents them from being reinvested. The result is that the overall return on the portfolio is dragged down as compared to other types of funds that are allowed to reinvest the dividends.
Related information about dividend drag:
- Dividend Drag Definition | Investopedia
A disadvantage of the dividend structure of unit trust exchange-traded funds ( ETFs) that results from SEC rules that stipulate that passively managed ETFs ...
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Definition of dividend drag: The effect created by the required (SEC rule) disbursement of dividends by unit trust exchange-traded funds which prevents them ...
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- The S&P 500 Decison - SPY or IVV? | ETF MarketPro
Since dividends cannot be reinvested, a 'dividend drag' is created where during climbing markets dividends add to the return of an ETF while during descending ...
- A Comparison of Mutual Funds and Exchange Traded Funds (ETFs ...
Jan 6, 2009 ... This has a slightly adverse effect on performance and is called "dividend drag,” which describes the accumulation of cash instead of additional ...
- The Dividend Drag - Association of Financial Mutuals
This is the 'dividend drag'- the loss to policyholder value that results from being shareholder-owned. In mutual organisations the dividend drag does not exist, ...
- 'All About Exchange-Traded Funds' Is A Comprehensive Introduction ...
Dec 6, 2011 ... Second, a plus for mutual funds, some ETFs suffer from dividend drag, “the implicit cost some ETFs incur as a result of the … SEC rules ...