The Milford Income Fund will pay quarterly distributions to investors around the 20th of the month in February, May, August and November. Additionally, investors may elect to “top up” distributions by selling units but must recognise this can reduce the value of their investment capital in the Income Fund.
The current distribution policy for the Fund is currently 1.60c per unit per quarter or 6.4c per unit per annum. This is lower than the before tax and fees rate being earned by the Fund as investors have no further tax to pay on any distribution
Please note that the total return investors receive will be a combination of distributions and changes in the value of the units due to movements (up and down) in the value of underlying investments. However no amount of return can be guaranteed and returns can be negative.
The distribution amount is different than the yield of investments in the Fund due to four main reasons:
- The ability to provide smooth investment distributions to investors over a medium-term period. There will be periods where market rates may be above long-term averages and vice versa.
- The ability to provide some growth in distributions over time by adopting a more cautious distribution policy.
- A buffer against any short-term negative movements in the value of fixed income and equity investments.
- Movements in the unit price – leading up to a distribution payment the unit price may rise reflecting income generated over the period. This means that the distribution yield maybe lower than the income being earned on investments
Milford will typically set a distribution rate that is lower than the actual income earned over time. However, where distributions are lower than income received this will be reflected in an increase in the value of units (assuming no capital movements in investments) and potentially higher distributions in the future.
The current yield of investments is noted in the monthly Fund update.