Distribution reinvestment plans

Most CEFs offer a dividend reinvestment plan (DRIP) run by the transfer agent. A common design: when the fund trades at a premium, the plan issues new shares at the greater of NAV or 95% of market price; when it trades at a discount, the agent buys shares in the open market at the market price. That means DRIP participants in discounted funds compound at the discounted price.

Not every broker enrols clients in the sponsor's plan; many run their own synthetic reinvestment at market price. Plan terms differ by fund and change over time — the plan document is linked from the Documents tab where the fund has filed it.

The reinvestment scenarios in our Income & Reinvestment tool use a stated pricing convention that you can change, and every forward-looking figure in them is an assumption, not a forecast.