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The Last Dividend

Some bond funds introduced dividend plans in their growth options to declare whopping dividends. News of not so lavish dividend also continued to flow. In a short week for markets, equity funds plunged while Debt funds gained.

On close of financial year, funds worked hard to give tax-free dividend besides providing an opportunity to book capital loss in future. Some bond funds even introduced dividend plan in their growth options to declare whopping dividends. Tata Income Fund gave the highest dividend -- 70 percent in the new Annual Dividend Option. IL&FS Bond Fund also paid a dividend of 35 percent in its newly started annual dividend option. Chola Freedom Income, which has recently been re-positioned as a short-term bond fund has formed a new semi-annual dividend plan from the existing Growth plan. And has declared a high dividend of 50 percent.

This was the last opportunity for the investors to earn tax-free dividends and book capital losses via a three-month investment in the fund. But, all dividends will not be eligible for the tax credit for this notional loss. Because the accounting standards do not allow recognition of loss if new investors invested in the funds with prior knowledge of dividend to be declared.

News of not so lavish dividend also continued to flow – Cholamandalam Growth (20%), Chola Freedom Income (4.5% in Quarterly Dividend Plan), Chola Triple Ace (4%), Pioneer ITI Gilt (2.25% in Monthly Dividend option of the Liquid Plan and 3% in the quarterly dividend option of Investment Plan), Birla Bond Plus (0.5%) in the monthly dividend option and Alliance 95 (20%).

Some funds also tinkered their rules, to get friendlier. GIC Liquid Fund reduced the minimum investment amount to Rs 5,000 in its Growth option and the minimum redemption amount to Re 1 and in multiples thereof. Tata Pure Equity, in its promotional offer reduced the minimum investment amount to Rs 2000 and in multiples of Re 1 thereafter.

IDBI-PRINCIPAL Mutual Fund has re-launched two Fixed Maturity Plans under its Deposit Fund – a 91-day plan and a 371-day plan. Taurus Mutual Fund has taken over the two schemes of Bank of India Mutual - Boinanza Equity Linked Saving on Tax Scheme 1993 & Boinanza Exclusive.

Fund Update: In a short week for markets, equity funds plunged while Debt funds gained. The average equity fund lost 0.49 percent against the market loss of 1.3 percent on the Sensex. But some funds gained. The key gainers were – UTI Petro (2.57%) and Bonanza Exclusive Growth (1.73%).

Medium-term Bond funds gained 0.12 percent. The key gainers were IDBI PRINCIPAL Deposit – EA/EB (0.49%), JF India Bond (0.42%), PNB Debt (0.38%) and ING Income Portfolio (0.36%). The Long and Medium term Gilt funds went up by 0.38 percent. The gainers were – Birla Gilt Plus Long – term Plan (0.62%), LIC GSF (0.59), Tata GSF – G (0.57%) and IDBI PRINCIPAL GSF Investment (0.56%).