ETF Dividends

Hi Natalie. The reason an ETF (and basically any share for that matter) tends to go down when a dividend is paid is because anyone who buys after this date (the ‘ex-dividend’ date) is not entitled to that dividend. So it would make sense that people would want to pay less for those shares after that date, since they’re not receiving the benefit of the dividend.

And especially because an ETF trades at precisely the net value of its assets each day. So after the dividend is paid and the cash leaves the fund, the ETF’s net assets drop by the amount of the dividend, which is immediately reflected in the price.

Hope that helps.