As we’re currently completing our End of Financial Year (EOFY) Review for all clients, we’d like to remind those with managed funds or listed equities that it’s quite normal to see a dip in portfolio value during July. While it may raise concern at first glance, this temporary drop is usually due to distributions and doesn’t reflect a permanent loss.

📦 What’s a Distribution?

Throughout the year, managed funds accumulate income—dividends, interest, and sometimes capital gains. By law, they must pay this income to investors as a distribution, usually around June 30 if they distribute annually.

When that happens, the unit price of the fund drops to reflect the payment. It’s similar to a share price dropping after a company pays a dividend. The value hasn’t vanished—it’s simply moved from being part of the investment to being paid out to your cash account.

🔄 Why Do Unit Prices Change?

When you invest in a managed fund, you receive units in proportion to your investment. Each unit has a daily value based on the underlying assets of the fund, minus any liabilities. Market movements, redemptions, or the issuing of new units can all impact unit prices.

So even if your number of units doesn’t change, the value of each unit can—and does—fluctuate regularly.

⏳ Why the Delay After 30 June?

Many fund managers pause transactions like switches or withdrawals in early July while they finalise unit prices. This delay ensures that distributions are correctly calculated and audited. Most final 30 June prices are available by late July, although some externally managed funds may take a bit longer, especially if they hold diverse or global assets.

Distributions are typically credited to your platform cash account, such as in a Wrap or Superannuation structure. In early August, we’ll review these holdings and rebalance where necessary, ensuring your investments stay aligned with your long-term objectives.

🧘 So, Should You Worry?

In short—no. A post-June drop in unit prices is usually a normal and expected outcome of how managed funds operate. Your underlying investment hasn’t lost value; it’s simply undergone an accounting adjustment.

As always, we’re monitoring each fund’s performance and distributions and will contact you if any action is required. If you have questions about your portfolio, distribution payments, or asset allocation, feel free to reach out.

Chris & Mark