How do Mutual Fund manage to pay huge dividends ?

by vishwas.tp Mon Mar 03 2008, 23:27

In recent times I had put some serious thinking into "How do Mutual Fund manage to pay huge dividends?”

For example:SBI Magnum Tax Gain on Feb 15th 2008 paid Rs.11/unit as dividend. The Unit price over a period of 1 year (March 07 – March 08) would average around Rs.55 and if we take Satyam computers as an example it gives around Rs.16-20 rupees as dividend per share priced around Rs.450. So SBI Tax gain is generating Rs.1 for every Rs.5 invested while Satyam is generating Rs.1 for every Rs.22.5 (450/20) .

So what is the MF house approach?

1. Are MF dividends exactly the amount what MF portfolio generates as dividends? Or
2. Are MF houses constantly book profit like a "Daily traders" and pay the income generated from this to the unit holders as dividends?

Just put your view on this.

by **enidhi** Tue Mar 04 2008, 16:05

I feel Fund Managers take full advantages of Market Volatility. They'll usually have several inside information and will be able to act before retail investor gets the news.

by **gbhupesh** Tue Mar 04 2008, 20:33

It is just giving cash back to customer. May not necessarily be money earned from dividends.

Paying dividend is about :
* Positioning of the product.
Some people need some cash time to time, though alternate is to encash their fund partially.

* Marketing poly
Inviting people to invest before Dividend payout in disguise that it is good to invest just before divident payout.

* Some time earlier dividend stripping was tax friendly, people preferred divident reinvestment option.

by Skumar Fri Mar 14 2008, 16:31

LIke any other marketing, even MF marketing is hyped...

by vishwas.tp Fri Mar 14 2008, 16:56

Ya... but they have delivered accordingly in the last 3 to 5 years..

by pawankumar Fri Apr 30 2010, 18:03

In the MF market While crop funds are increasingly becoming popular among investors, some of the conservative market experts fear a deep credit squeeze or a string of payment defaults could result in loss of investments.i wonder how true that fear is?

Currently fund houses like Templeton, DWS, Reliance Mutual, Religare Mutual and Kotak Mutual Fund have crop funds with varying investment styles and structures.

by akhi kashyup Mon May 03 2010, 20:18

pawankumar wrote:In the MF market While crop funds are increasingly becoming popular among investors, some of the conservative market experts fear a deep credit squeeze or a string of payment defaults could result in loss of investments.i wonder how true that fear is?

Currently fund houses like Templeton, DWS, Reliance Mutual, Religare Mutual and Kotak Mutual Fund have crop funds with varying investment styles and structures.

i think that fear is unwarranted!

by akhi kashyup Wed May 05 2010, 18:37

on the other hand..The country's largest fund
house, Reliance Mutual Fund, witnessed an increase of over Rs 1,400 crore in its
average assets in April.

The company witnessed an addition of Rs
1,406.62 crore in its average assets under management (AAUM) to Rs 1,11,819.33
crore during the month, according to the data available with the Association of
Mutual Fund of India.

by lakhvinder Fri May 07 2010, 18:46

akhi kashyup wrote:on the other hand..The country's largest fund
house, Reliance Mutual Fund, witnessed an increase of over Rs 1,400 crore in its
average assets in April.

The company witnessed an addition of Rs
1,406.62 crore in its average assets under management (AAUM) to Rs 1,11,819.33
crore during the month, according to the data available with the Association of
Mutual Fund of India.

really?thats amazing news...when everyone else around is making so much loss these guys come up with such huge profit margins!

by seenathkumar Thu May 20 2010, 15:42

Really thanks for the information on mutual funds. Hoping you will be there with more information on mutual fund india....

by akhi kashyup Fri May 28 2010, 15:52

i wanted to know something about Reliance Regular Savings Equity midcap mutual funds.If anyone has any information on it...Pls share!

by pankaj joshi Mon May 31 2010, 18:41

akhi kashyup wrote:i wanted to know something about Reliance Regular Savings Equity midcap mutual funds.If anyone has any information on it...Pls share!

Reliance Regular Savings Equity is a multicap fund It is a combination of both large caps as well as mid cap stocks.

The risk is probably much more higher but since if you decide to invest
in multi caps as an investor you are assured of having some options
that will perform well in just about any market condition.

So i will advice you to go for it!

by akhi kashyup Tue Jun 08 2010, 20:27

i am thinking about investing in some mutual funds for short term investment from the house of hdfc,icici and reliance.Pls suggest something good!

by pankaj joshi Fri Jun 11 2010, 17:58

akhi kashyup wrote:i am thinking about investing in some mutual funds for short term investment from the house of hdfc,icici and reliance.Pls suggest something good!

Some of the best plans are:

Reliance Short-term-Growth

ICICI Prudential Short Term Plan - Growth

HDFC Short Term Growth Plan
HDFC Short Term Monthly Dividend Option
HDFC Short Term Quarterly Dividend Option

Reliance Short Term Fund-Dividend Re-investment Plan
Reliance Short Term Fund-Growth Plan
Reliance Short Term Fund-Quarterly Dividend Plan

you can invest anywhere between 1 year to 3 years in them.
They sure are good profitable funds!and the minimum investment is 50,000!

by lakhvinder Thu Jun 17 2010, 17:50

pankaj joshi wrote:
akhi kashyup wrote:i am thinking about investing in some mutual funds for short term investment from the house of hdfc,icici and reliance.Pls suggest something good!

Some of the best plans are:

Reliance Short-term-Growth

ICICI Prudential Short Term Plan - Growth

HDFC Short Term Growth Plan
HDFC Short Term Monthly Dividend Option
HDFC Short Term Quarterly Dividend Option

Reliance Short Term Fund-Dividend Re-investment Plan
Reliance Short Term Fund-Growth Plan
Reliance Short Term Fund-Quarterly Dividend Plan

you can invest anywhere between 1 year to 3 years in them.
They sure are good profitable funds!and the minimum investment is 50,000!

wow.thanks.useful info to me! How do Mutual Fund manage to pay huge dividends ? Icon_smile

by ronak Wed Jul 07 2010, 17:48

Hi,
What is difference between dividend and growth in Mutual Fund ? Which one is best for SIP?
Please reply..

by sru123 Sat Aug 07 2010, 14:39

hi
iam thinking about investing in some mutual funds for short term investment from the house of hdfc,icici and reliance.Pls suggest something good!

regards,
phe9oxis,
http://www.guidebuddha.com

by Filson Tue Aug 17 2010, 16:11

This mutual fund got into the top ten with a fifteen and a half percent annual growth. The fund focuses on China, which makes it somewhat riskier at times, but it has seen some high dividend yields. This last 12 months have been good for this fund.

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How do Mutual Fund manage to pay huge dividends ?

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difference between dividend and growth in Mutual Fund?

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