The more cautious approach prefers purification of both dividends and capital gains. One reason is consistency: all unit-holders are treated similarly whether they exit the fund before or after dividends are received.
Without this, one investor might redeem before a dividend purification reduces the fund value, while another redeems later and indirectly bears a larger purification effect.
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Equity Funds: Purification and Fund Management
The more cautious approach prefers purification of both dividends and capital gains. One reason is consistency: all unit-holders are treated similarly whether they exit the fund before or after dividends are received.
Without this, one investor might redeem before a dividend purification reduces the fund value, while another redeems later and indirectly bears a larger purification effect.