Why there is no sense in picking dividend option in an equity mutual fund
Dividends/IDCW have no impact on the return you are getting from your investment.
Synopsis
It’s accurate because, in any real sense of the word, there were never any dividends paid in mutual funds. It was always an illusion.
At the beginning of this financial year, Sebi changed one of the oldest pieces of nomenclature in Indian mutual funds there is no such thing as dividend any more. What used to be called dividend is now simply called distribution and what used to be called dividend plans of mutual fund schemes are now called ‘Income Distribution cum Capital Withdrawal’ plans. That’s a mouthful so these will be called IDCW, which is also a mouthful but nothing can
Despite unstable market conditions, mutual fund investors have invested in several schemes and got double returns and that has surged the investment in mutual funds.
Fund raising for public issues up 115 pc in FY21 ANI | Updated: Apr 14, 2021 10:55 IST
New Delhi [India], Apr 14 (ANI): An amount of Rs 46,029.71 crore and Rs 64,058.61 crore were raised through public issues and rights issue respectively in FY 2020-21 as against Rs 21,382.35 crore and Rs 55,669.79 crore raised last year, the government said on Wednesday.
This is an increase of 115 per cent and 15 per cent respectively despite the uncertainty prevailing owing to COVID-19 pandemic, according to a statement released by the Ministry of Finance.
Similarly, around 2003 issues of corporate bonds for an amount of Rs 782,427.39 crore happened in FY 2020-21, surpassing the amount raised (Rs 689,686.19 crore) through 1,821 issues for the fiscal year 2019-20.
To comply with the new definition, existing multicap schemed would have had to undergo large-scale churn. “Renaming the fund as Kotak Flexicap Fund, gives an additional flexibility for us to choose between various market capitalisation buckets,” said Harsha Upadhyaya, President & CIO – Equity, Kotak MF Mahindra Asset Management Company, who also manages the fund. The fund house said the scheme “will continue to follow the top-down sectoral approach supplemented by bottom-up stock picks. The fund will also continue to take concentrated sector allocation diversified at a stock level.” Kotak MF has also filed the offer document with Sebi to launch a new multicap scheme.
The Supreme Court (SC) on Friday upheld the validity of Fraklin Templeton’s e-voting process, paving the wave for the wind-up of the asset manager s six debt schemes. In addition, it has appointed SBI Funds Management the authorised entity to work on the monetisation of assets. “Franklin Templeton Mutual Fund will provide all assistance and cooperation to SBI Funds Management to monetise the assets. The decision of the Supreme Court to dispense with voting under regulation 41 reduces any potential delay in commencing active monetisation of assets,” said a Franklin spokesperson. Earlier this week, the apex court had approved of the mechanism proposed by SBI Funds Management to distribute Rs 9,122 crore to unitholders of the six debt schemes. The distribution mechanism was framed in consultation with the Securities and Exchange Board of India and Franklin Templeton MF.