A comparison of the dividends declared under direct and regular investment options reveals some interesting facts
28-Jan-2015 •Research Desk
Eight out of 195 open-ended equity funds that declared dividends in 2014 have offered significantly higher dividends under their regular plans. The difference between the dividends declared under regular and direct options in some schemes was as high as 100 per cent. However, only six schemes, primarily from Religare MF, have declared more dividends under their direct plans during the same period. But the difference in payouts between the direct and regular options was modest in comparison. So, does this mean that regular plans pay more dividends?
Not really. A closer look at these things reveals that schemes that declared huge dividends under their regular plans have been around for a long time and they also had large corpuses. That could explain why they could afford to be generous in their payouts. Two, direct plans in comparison have been around only since 2013 and they may not have huge realised gains to distribute among investors.
Mutual funds can pay dividends only out of realised gains. Funds used to pay dividends from their premium reserves earlier, but Securities and Exchange Board of India (SEBI) in March 2010 has asked them to pay dividends only from the realised gains made on their portfolios.
It may not be a great strategy to look for dividends in an open-ended equity scheme. An investor doesn't need a fund manager to declare dividends periodically when he has the option to redeem the units whenever he wants. The dividends in mutual funds are different from stocks as the NAVs of mutual funds come down in the exact proportion to the dividend declared.
|Name||Date of Dividend||Regular||Direct||% Change|
|Principal Dividend Yield||30/12/2014||32||27.4||16.8|
|IDFC Imperial Equity||29/01/2014||12||9||33.3|
|BOI AXA Equity||18/12/2014||70||50||40|
|ICICI Pru Top 100||17/04/2014||15||10||50|
|ICICI Pru Top 200||31/10/2014||20||10||100|
|DSPBR Top 100 Equity||03/03/2014||19||9||111.1|
|Name||Date of Dividend||Direct||Regular||% Change|
|Religare Invesco Mid N Small Cap||08/08/2014||25.5||25||2|
|Motilal Oswal MOSt Focused 25||24/11/2014||11.2||10.9||2.8|
|Principal Large Cap||30/12/2014||36.9||35.7||3.4|
|Religare Invesco Business Leaders||28/11/2014||22||20||10|
|Religare Invesco Equity||28/02/2014||20||15||33.3|