Equity MFs dole out dividends as markets rally
It's raining dividends for equity mutual fund (MF) investors. Though
fund houses typically announce dividends for equity MFs at the end of
the financial year, the market rally has prompted them to offer payouts
for a large number of schemes now.
More than 35 equity schemes have announced dividends in the past one month alone. Fund houses have paid dividends of Rs. 3 per unit (or 30%) in several of their schemes. The sharp rise in markets has boosted the performance of several equity MFs in the past one year enabling fund managers to dole out dividends.
While mid and small-cap funds have surged by about 25% in the one-year time frame (till March 26), tax-saver equity MFs have gained about 21% for the period. Large and mid-cap funds and diversified equity MFs offered 18.5% and 18.4% returns respectively during the one-year period. The Sensex has jumped 17.9% while the Nifty gained 17% in the last one year.
"The returns have been quite good this (financial) year. Fund houses are giving dividends as one-year returns are 22%-30% (in many schemes)," says Sunil Singhania, head, equities, Reliance Capital Asset Management.
"It is a function of markets. The markets have given handsome gains this year," says Gopal Agrawal, chief investment officer, Mirae Asset Global Investments India. The market upswing has brought good tidings even for beaten down sectors and stocks.
The infrastructure sector, which was one of the worst performers in the past few years, has advanced 12.8% in the last one year. Equity MFs that invest exclusively in infrastructure stocks have declined about 2% per year on an average in the past three years.
Some schemes have announced a dividend after a gap of about three years while a few others have declared their highest payout in five years. For instance, SBI Bluechip Fund has announced a dividend for the first time since November 2010. The fund has advanced 17.2% in the last one year.
Birla Sun Life Tax Plan has announced a dividend of Rs. 4.25 per unit (42.5%), the highest in five years. Mirae Asset Emerging Bluechip Regular, which has surged 33.6% in the one-year timeframe, has offered a payout after nearly 1 ½ years.
Many funds used to offer high dividends even if the market conditions were bad just to lure investors. As a result, their net asset values fell sharply. This prompted market regulator SEBI to stipulate in 2010 that dividends should be offered only from actual realised gains and not from the unit premium reserve. This had a sobering effect on payouts with the quantum of dividend falling when the market conditions turned bad. Some funds even stopped paying dividends in a bad year
More than 35 equity schemes have announced dividends in the past one month alone. Fund houses have paid dividends of Rs. 3 per unit (or 30%) in several of their schemes. The sharp rise in markets has boosted the performance of several equity MFs in the past one year enabling fund managers to dole out dividends.
While mid and small-cap funds have surged by about 25% in the one-year time frame (till March 26), tax-saver equity MFs have gained about 21% for the period. Large and mid-cap funds and diversified equity MFs offered 18.5% and 18.4% returns respectively during the one-year period. The Sensex has jumped 17.9% while the Nifty gained 17% in the last one year.
"The returns have been quite good this (financial) year. Fund houses are giving dividends as one-year returns are 22%-30% (in many schemes)," says Sunil Singhania, head, equities, Reliance Capital Asset Management.
"It is a function of markets. The markets have given handsome gains this year," says Gopal Agrawal, chief investment officer, Mirae Asset Global Investments India. The market upswing has brought good tidings even for beaten down sectors and stocks.
The infrastructure sector, which was one of the worst performers in the past few years, has advanced 12.8% in the last one year. Equity MFs that invest exclusively in infrastructure stocks have declined about 2% per year on an average in the past three years.
Some schemes have announced a dividend after a gap of about three years while a few others have declared their highest payout in five years. For instance, SBI Bluechip Fund has announced a dividend for the first time since November 2010. The fund has advanced 17.2% in the last one year.
Birla Sun Life Tax Plan has announced a dividend of Rs. 4.25 per unit (42.5%), the highest in five years. Mirae Asset Emerging Bluechip Regular, which has surged 33.6% in the one-year timeframe, has offered a payout after nearly 1 ½ years.
Many funds used to offer high dividends even if the market conditions were bad just to lure investors. As a result, their net asset values fell sharply. This prompted market regulator SEBI to stipulate in 2010 that dividends should be offered only from actual realised gains and not from the unit premium reserve. This had a sobering effect on payouts with the quantum of dividend falling when the market conditions turned bad. Some funds even stopped paying dividends in a bad year
vijay kr yadav
pgdm sem-2
sou- times of india
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