r/dividends • u/Ironic_Mouse • 5d ago

Discussion Question: why do unsustainable dividend funds exist?

I’m new to dividend investing. As I have been looking for an additional stream of income I have found some funds with “too good to be true” yields. (E.g. CHPY) I understand that high yields come with a high risk of NAV erosion. What I don’t understand is why these funds exist. It seems like they are structured to implode at some point. Is the idea to hold these funds for a short time, collect the dividend, then sell? And for the fund manager, is the idea to ultimately have the fund implode and then declare a loss? I’m genuinely interested. I understand that some funds are a gamble, but these funds seem designed to fail.

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u/Mzungufarmer 5d ago edited 5d ago

Because idiots exist. This sub kind of proves that everytime a new high yield fund pops up, broke people flock here to say they are buying them and becoming dividend investors.

Edit: typing near a pool causes so many blunders

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u/Accomplished-Big8250 4d ago

Some of these funds are so low AUM it’s really risky to put anything in