International equities - frequently asked questions
Why is dividend reinvestment required for all international stock portfolios?
Paying dividends in additional shares rather than cash is intended to reduce portfolio expenses, thus enhancing investment returns. Transaction costs are relatively high in some international markets – bank custody fees alone are $90 per trade in Spain, for example. Paying cash dividends at a specific time each year would either require the fund to set aside cash for future dividend payments (thus remaining underinvested in equities) or sell securities to raise cash, incurring transaction costs.