I've had an understanding question regarding accumulating and distributing ETFs for a while.
How exactly does reinvestment work?
With the distributing ETFs, I can buy more shares through the dividends, whereby after a certain time the compound interest increases the possible share purchase exponentially.
With reinvestment ETFs, the dividends paid out by the companies are reinvested in the ETF.
Does the fund volume increase?
But my shares do not become more, as if I can buy new ones with the distributing ETF.
And how the dividends are reinvested in the reinvesting ETF is also not clear to me.
Are only the same companies that also distribute dividends bought again with the dividends?
Are new shares bought from all companies in the ETF?
How does this offer me as an investor an advantage, if only the fund volume and invested sum in the ETF contained companies increases, except possibly that one does not have to pay capital gains tax on the dividend.
Maybe I'm lost and someone can explain to me how I can also profit from the interest rate in the case of accumulation funds.