Korean Job Discussion Forums

[Ya-ta Boy]

A few years, jobs, towns and banks ago I opened two mutual funds with Nong Hyup Bank. All was fine and dandy while the market was going up. While disappointing, things were fine while the market was going down.

HOWEVER, today was bill-paying day (I have a couple that can't be done online) so I went in to the same local branch I've used since I've been at this job. There was a new friendly clerk behind the desk. She informed me that I needed to sign a form for a 'bridge account'. I asked why.

Her explanation puzzles me, BIG TIME. She said, and the young man she called over to help explain said, that the law has changed and every quarter any interest/profit will be taken out of my fund and deposited in my regular account. They were unable to say anything more than the law changed last month.

Doesn't this defeat the whole purpose of a mutual fund?

What am I missing????

[Jane]

Mutual funds are basically shares in a variety of companies.

Maybe your mutual fund is now paying dividends? Check out the article below. They are called ETFs (Exchange Traded Funds), where some of the stocks in the mutual fund pay dividends.

Maybe the fund manager has decided to invest in dividend paying mutual funds.

Other than that...no idea what happened!

http://www.usatoday.com/money/perfi/columnist/krantz/2006-10-05-dividends_x.htm

[Otherside]

Jane, I'm certain that the shares in his mutual fund are paying dividends.

However, from a growth-orientated investors point of view, you'd want the dividends to be re-invested to provide for the best capital growth.

Almost all unit trusts (what we call mutual funds in the anglophone world) pay dividends, usually when you sign up you choose whether you want the dividends paid out or re-invested. Unless you are an income-investor (hoping to live off the income generated from your investments) it's almost always better to re-invest the dividends.

I guess the OP is just wondering why this changed? And to that, I can't help him

[Ya-ta Boy]

Thanks for the attempts so far.

According to what they said today, ALL 'funds' are now this way (profits transferred out every three months). For the 3 years I've had these funds, the profits (when there were any) remained in fund in the normal way.

Now it sounds like I'll have to go in and withdraw profits that have been transferred into my regular savings account and re-transfer them back into my funds. No doubt paying for the privilege each direction.

[Ya-ta Boy]

Calling any and all Korean fund investors...