# DRP - Distribution Reinvestment Plan



## grant7 (1 July 2022)

So I hold BBUS shares and today 1st July they issued this DRP thing which from what I can understand is different to a Dividend reinvestment plan (which I can find plenty of info on)   Basically the share price went down about 10% overnight and it seems I am being issued cash about 10% (to come in a few weeks).
Could anyone explain why ?  What was the reason for reducing the share price and distributing that money to share holders ?

Thanks!


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## qldfrog (1 July 2022)

grant7 said:


> So I hold BBUS shares and today 1st July they issued this DRP thing which from what I can understand is different to a Dividend reinvestment plan (which I can find plenty of info on)   Basically the share price went down about 10% overnight and it seems I am being issued cash about 10% (to come in a few weeks).
> Could anyone explain why ?  What was the reason for reducing the share price and distributing that money to share holders ?
> 
> Thanks!



BBUS and other ETFs receive some returns from their options..these are basically options plays;
They return these amounts to avoid distording too much the SP of the Unit; But there is still a distortion, as we all know this money is coming in,, so for example, this morning I was losing 5k on a GEAR packet (opposite brother  from BBOZ) ..which is basically the amount of cash i will received mid July .so now we are reset for another quarter/semester, etc based on the index more closely..
And we should follow more closely the index with a slight bias increasing till next ex payment (similar to Ex Div )
That is my understanding, i could be wrong ...


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## frugal.rock (6 July 2022)

grant7 said:


> Could anyone explain why ? What was the reason for reducing the share price and distributing that money to share holders ?





qldfrog said:


> similar to Ex Div



Firstly, I think it's the "market" that reduces the share price based on the news of the distribution amount. (Market Maker's)

A share price drop usually happens when a stock goes ex-dividend, and, said drop is usually proportional to the value of the dividend to be paid.

Essentially and a very basic version, the share price multiplied by the number of shares on issue, gives an approximate market capitalisation, or a monetised company valuation.

If  a company pays a dividend, a proportion of the company value is being paid to share holders, thus, the company value theoretically drops, usually by means of a share price fluctuation, which is a normal market balancing act.

I think BBUS is a fund?, but I understand the basics to be the same or similar, for the purpose explained here.
Instead of dividend, it's a distribution etc


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## frugal.rock (6 July 2022)

grant7 said:


> DRP thing which from what I can understand is different to a Dividend reinvestment plan



The 2 are essentially the same thing.

Forfeit your "cash return" in exchange for more stock. Stock often discounted.

From what I have read, I would think many people here on the forum probably wouldnt participate in the DRP for BBUS, as it seems to be generally considered as a short term holding, by typical consensus.


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