I have invested in HDFC Equity – D. Recently, the fund declared a dividend and on the very next day, the fund’s NAV fell by 10-12 per cent. Is this alright?
Rajan
The net asset value (NAV) of an equity mutual fund comes down by exactly the amount of dividend paid out. Since there is no dividend distribution tax in case of equity funds, this fall in NAV is very precise. Over and above that, the NAV could also be impacted by the change in the equity markets.
This article was originally published on March 13, 2013.
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